If the unfortunate happens and you lose your life, what happens to your debts? This is a question many people ask as they don’t want to leave a burden behind for their families. Most people have some level of personal debt, and how it is resolved will depend on your individual circumstances.
In the following article we explain how debts can be settled, and how you can protect your family financially long after you are gone.
Who Is in Charge?
It is important to have a legal will to ensure your wishes are clear. When you prepare your will, you should appoint an executor who will take care of financial and legal arrangements. This person should be someone you trust.
You should discuss the role with them prior to finalizing your will. This will ensure they are comfortable managing your financial commitments and attending any court hearings. You can also discuss preferred funeral arrangements with your executor.
What About Debts?
The good news is that when you die your debts won’t automatically get passed on to your family unless they cosigned with you. However, any outstanding debts will need to be paid before any money or property is given to your heirs.
This could mean your home or vehicle is sold to cover other arrears. If there is anything left over, this will be then be shared as stated in your will. It makes smart financial sense to understand your debts and your personal wealth before preparing other legal documents.
What About Life Insurance?
Whether or not you have existing debt, life insurance is recommended. It can help to pay for burial costs, support your family and leave something for your children’s future. USAA is a trusted insurance company with low-cost policies and extra benefits for those serving in the military.
There are two options to choose from, and each can be customized to suit your unique situation. Permanent Life Insurance is a long-term commitment, and it will be there when your family needs it the most. Over time, the cash value will grow, and you can even get guaranteed interest on your investment. Term Life Insurance lasts for up to 30 years, and the money can be used for education or other larger expenses.
Can I Get Extra Coverage?
When you choose a reputable insurance provider you may be able to boost your plan. As an example, for a small additional fee, you could get coverage for your dependents. Another option worth considering is disability protection, to give you financial security if you are the survivor of an accident.
If you are unsure you should seek advice from a financial advisor. Using one provider for your different insurance types could reduce the monthly premiums if they offer a package deal. Just make sure you keep all your policy information with your will, in case your executor needs to access it quickly.
Protecting Your Family Financially
When you pass there will likely be immediate expenses. These could be debts such as mortgages, loans and expensive burial fees. If there is not enough to cover your expenses and support your family into the future, life insurance will give you peace of mind that they will be taken care of. Plans can be modified to suit your circumstances and give those you care about financial security if they ever need it.