Life insurance key to ensuring debts and burial costs are paid for after death

May 16, 2011

Life insurance death benefit funds may assist with funeral and burial expenses.

For individuals who are concerned about their debts, including funeral expenses, being covered after their deaths, there are a number of options, according to Cleveland Jewish News.

The source says that many funeral directors offer pre-need burial contracts that individuals can obtain while they are still alive to ensure their funeral arrangements are taken care of, the source says.

As for debts, individuals with the financial resources can set aside enough money in an account to have their estate bills covered. If the account is a power of attorney account or does not have anyone listed with right of survivorship, some of the funds may go to covering debt. However, the source warns that these accounts are considered estate property and some of the money may not be transferable after death.

In this situation, the source says, obtaining a life insurance policy may be the best solution. Death benefit funds can be used by a beneficiary both for covering funeral expenses as well as outstanding debt.

The source also discusses the importance of making an agreement with the life insurance beneficiary. Since the beneficiary is not obligated to pay off the debts of the deceased with the death benefit, a written contract may be required to order a beneficiary to do so, the source recommends. This same precaution should be taken with a power of attorney account.  

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