10May/113
Does life insurance have to be used to pay the deceased debts?
Question by pc: Does life insurance have to be used to pay the deceased debts?
If I am the beneficiary of life insurance payment after someone dies, do I have to by law use that money to pay off the deceased debts? Or is this something that the bill collectors cannot touch at least legally? How would the creditors even know that there was a payout of life insurance? Anyway for them to know this? Can I get in trouble for not paying?
Best answer:
Answer by msi_cord
I believe life insurance must go to cover the debts of the deceased prior to being dispersed to the beneficiary. That is part of the reason why you take out life insurance.
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May 10th, 2011 - 22:06
Unless you want to be stuck in court and paying it to lawyeres, YES
May 10th, 2011 - 22:52
No it isn’t a law that you have to satisfy the deceased debts with the Life insurance thats up to you but what is the right thing to do would the deceased have wanted you to pay off their debts
May 10th, 2011 - 23:30
There are certain loans and debts that cancelled upon someone’s death…like most federal student loans.
However, mortgages, auto-loans, and credit cards are often covered by either the deceased’s estate or the insurance policy prior to being dispursed to the beneficiary.
I suggest getting a lawyer to aid in the paperwork and obligations that go along with being a beneficiary.