Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Paying BillsIn most cases, you are under no obligation to pay off any of the deceased person’s debts regardless of whether you are the beneficiary of a life insurance policy or not.

Like most things, however, there are exceptions to every rule. So read on if you want to discover whether you are now responsible for any of the debts owed by someone who has died.

To find and compare life insurance rates be sure to enter your zip code into the free insurance quote tool above!

Debts that Have to be Paid

If someone who dies has a house or a vehicle that they are paying a lender for, then those debts have to be paid. If they aren’t paid then the lenders have the right to take those assets and do whatever they want with them. Even if you are listed in the will as the beneficiary of the house, you don’t own it, the bank does.

The bank will accept payments from you as they prefer to have the mortgage paid than to figure out how to sell it (especially in this very tough housing market). The same applies to a car payment; the lender won’t blink an eye as long as the bill is being paid.

Another debt that has to be paid is any tax debts that are owed to the state or federal government. They don’t care if the person has died; if necessary they will put a lien on the home or any other assets that were owed by the deceased to ensure that they get the money that is owed them.

In addition, any debts that have a second person’s name on it must be paid as well. The most common situation for this is the spouse of the diseased. In most situations a spouse will be on a loan agreement for a house and sometimes for a vehicle as well. In addition; if you are a cosigner for any credit cards or loans or you are an authorized user, you will be responsible for paying the debt. I doesn’t matter if you never access the accounts or use them; once your name is attached to the debt you become responsible for it.

In any case, your responsibility has nothing to do with being a life insurance beneficiary. Once someone dies the beneficiaries get the benefits and they can go on with their lives. These benefits cannot be stopped or garnished by a lender or a creditor; it is yours to do with what you wish.

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What to do When Someone Dies

When a loved one dies, you need to start informing people. This may be the last thing on your mind, especially if you were close to the person who died, but this needs to be done. Your first call should be to the insurance company where they have their life insurance policy. You want to get the benefit paid out as soon as possible.

You will also want to get at least a half a dozen copies of the death certificate to send to each debtor as well as the insurance company as proof of the person’s death. This may seem troublesome to you, but many people do try to defraud the insurance company or their debtors by faking their death or the death of a loved one.

To reduce fraud a certified copy of the death certificate is required. You can purchase extra copies of a death certificate from your state’s Department of Records, Department of Vital Records or Department of Vital Statistics depending on what state you live in.

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Debts that do Not Have to be Paid

Unless your name is on them, then you don’t have to worry about any debts to creditors, the hospital or personal loans. The exception for any hospital bills is if you signed as a guarantor for the hospital bill.

Many people end up paying unnecessary bills because they don’t realize that they aren’t obligated to pay certain debt. This obligation is further muddled because creditors will call and demand payment from you. If they haven’t already received a death certificate from you then send them one and then demand that they stop calling. If necessary, put it in writing. They are required by law to stop calling you if you request it in writing. Do not let a creditor harass you into paying a bill you don’t owe; it is that simple.

In addition, you should no longer be paying premiums on the life insurance policy of the deceased. If you informed the insurance company of the death of the person this probably won’t be an issue; if a bill comes, however, call the insurance company and reiterate that fact that the person is dead. It is possible that the bill was sent automatically because the system hasn’t caught up with the current information.

Protect Yourself from Similar Issues

Protecting yourself from similar issues is easy. Make sure that you purchase enough life insurance to cover any debts that your family is responsible for and attempt to keep your other debts to a minimum. In addition, try not to get joint loans or credit so that upon your death no one will be responsible for them.

A life insurance policy is a security blanket for your family after your death. They can use the money to pay off the house or to put in the bank to simply live off of; they will be able to make that decision for themselves. Life insurance doesn’t have to be expensive and can be downright cheap if you are in good health and have a good family history health wise.

If you currently don’t have a life insurance policy and you have family members that depend on your income then you need to purchase some now. Using our free rate tool will allow you to get quotes from several companies in a single place so that you can see what you can expect to pay for your life insurance.

It is important that you answer all of the questions accurately so that you get an accurate quote. In addition, be prepared to submit to a blood test and a physical if you plan on purchasing whole life insurance. Some term life insurance policies won’t require this, but many do.

Regardless, complete the questionnaire after clicking the link at the top of the page and you will get your quotes instantly. You can also change your criteria for different types of life insurance so that you can see what type is best suited for your situation.

Just enter your zip code for free life insurance rate quotes now!