Your Options if Life Insurance Policy Doesn’t Cover All End of Life Costs

Your options if life insurance doesn’t cover all end of life costs are to make a deal with your creditors and apply for government assistance if necessary. If you have substantial debt, go through and assemble a list of all creditors and account holders. Notify these people about the situation that you are in. You may get offers from them to reduce the debt, freeze interest rates, or eliminate the debt altogether. Learn more about your options when life insurance doesn’t cover all ever of life costs in our guide below.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Nov 22, 2020

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Most people don’t want to leave a huge amount of debt for their families to deal with in the case of their demise. In fact, most of us would like to even be able to leave some money for those loved ones that are left behind after we die.

These are two of the main reasons that we get life insurance. The sad fact is that many life insurance policies are inadequate to meet all of these needs. None of us wants to have our family dealing with bill collectors harassing them about debts we accrued during our lives. This is the last thing that our surviving family members need on top of their grief and loss.

Anytime a major change takes place in your life like an addition to the family, property purchases or lifestyle changes your life insurance should then be reevaluated. You may also find yourself in a situation where your expenses have suddenly risen; this may be a good time to look at a term life policy for some added protection.

Be sure to check all of your insurance policies on a regular basis. It is not uncommon for life insurance policies, especially when term life insurance polices have been added, to accumulate. You should also be aware of any and all requirements that you need to fulfill before claims can be paid. Be sure that you understand all the details in your policy and that you have followed the steps that are needed so payouts can occur without any snags. If a life insurance claim has already been paid, then you’ll need to look at other options.

Find Out Which Debts You’re Legally Obligated to Pay

People always want to be paid, so creditors are going to insists that any debt that you owe to them must be paid in full, but this is not always true. If you have checked out your policy and everything seems to be in line and you have met all the requirements, you may want to consult with a legal professional to determine which of the debts are still your responsibility.

Obviously, large debts like mortgages or property payments and many others need to be paid. Smaller debts like phone contracts, gym memberships and other agreements may not be carried over. Your legal
consultant should be able to help you sort all these details out.

Make a Deal with Creditors

Creditors want to be paid, that is the bottom line. You should go through and assemble a list of all creditors and account holders. Notify these people about the situation that you are in. You may get offers from them to reduce the debt, freeze interest rates, or eliminate the debt altogether.

Most creditors will be able to work something out with you. After all they would rather get paid some of what they owe, rather than alienating a customer and standing a chance of getting no payment at all. Work with these creditors to see what you can come to an agreement on.

Government Assistance

Another option is to reach out to the government. There are many programs in place that can help you pay for or reduce debts. These government sponsored programs help people get their finances in order and get their life back on track.

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