Life insurance is typically thought of as simply a payout for those who are left after the holder of the policy is gone. In movies, there is often drama surrounding beneficiaries and the untimely death of the policyholder. Life insurance, however, is so much more than just a payday for those left behind. Life insurance can be used as a means for paying for funeral costs, paying for estate taxes, a post-mortem donation to important causes, paying off a mortgage, and more, in addition to a means for providing for your loved ones. Another purpose of life insurance is paying off the deceased’s debt.
Debt Doesn’t Just Go Away
Debt collectors take debt seriously. You can not only see this in the amount of interest charged, but also by the means in which debt collectors go to retrieve what they are owed. Debt is debt and giving up the ghost won’t get you out of paying up on your responsibilities. Just as your beneficiaries inherit your worldly possessions, they also inherit your debt. So, if you have accumulated a monstrosity of debt, you may want to begin to think about what this might mean for your beneficiaries.
What Happens After You Die
After you die, all that is yours becomes your estate and your estate will have someone usually called an executor or administrator overseeing it. They will be someone that you have designated before death to carry out those actions exacted in your will. The executor has many responsibilities, but these are those relating to debt after death:
Creditors Are Notified
After you die, the executor will notify the main credit reporting agencies of your death to prevent your identity from being stolen. Also, they will need to request your credit report to have a clear and complete picture of your debt.
The One Responsible Is Found
After someone dies there is always the conundrum of figuring out who gets what. In the case of debt there must be the same differentiation. If you are cosigned with someone on the debt you owe, then they will be responsible. Those who are authorized signers or additional cardholders, however, aren’t responsible because they didn’t originally apply for the credit card. An authorized user must stop using the card for this reason: any funds spent would be fraud.
Ready to Prepare & Invest?
Life insurance has a variety of functions that can aid you in life and assist those you leave behind. However, to get the most out of your life insurance, you must 1) buy the right policy, and 2) buy from the right financial advisors. We at Naples Life Insurance & Annuity Advisors offer clients in the Naples area life insurance that can address their needs and help them build a prosperous future for themselves and their beneficiaries. To learn more about available life insurance and about Naples Life Insurance & Annuity Advisors, visit our website.