Money traps widows should avoid

Oct 07, 2011

Losing a partner can be a confusing and emotional time. Life insurance can help ease those troubles.

Losing a loved one can be a devastating event, and worrying about finances while grieving can cause many surviving spouses to fall into money pitfalls. As statistics show women tend to live longer than men, there are certain traps widows should be aware of and avoid.

After a death, the surviving spouse can feel a mix of emotions - fear, grief, despair and an urgency to take action - all at once. And while many financial tasks should be completed within a month or two of the death, other obligations do not need to be taken care of immediately, the Bulletin reported. In fact, many financial decisions should be handled once emotions and circumstances have calmed down.

In addition, a family member's death can lead many people to ask for money. Whether it be a child, a salesman or an organization, knowing that the surviving spouse is in a vulnerable state can tempt people to take advantage, the news source reported. It is smarter to remain conservative with all major donations or purchases until all financial information has been clearly explained and the grief is no longer overwhelming.

One piece of financial information all surviving spouses should clearly understand even before the passing of their loved one is the life insurance policy. Every month, policyholders pay a premium into a term or permanent life insurance policy. The money goes toward a fund that has death benefits set for a beneficiary, which can provide financial protection for families after the policyholder passes away. Not only are the death benefits important for surviving family members, but many plans enable policyholders to borrow against it for other monetary needs such as college funding and retirement.

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