How Does Debt Impact Life Insurance?

If you have debt, then you know how stressful it can be – and debt is a big issue for many people in the U.S. In fact, the average personal debt for an American is a whopping $90,000! And if you are one of the many people saddled with all of this debt, you probably also stress about leaving your debt behind for your family to deal with when you pass away, or about not being able to leave them anything when you’re gone. The solution? Life insurance can help you pay off your debts AND allow you to provide your family with money when you are gone. But the big question is: can you even buy a life insurance policy when you are in debt, given that life insurance companies look at your finances when you apply for coverage?

Can You Buy A Policy if You’re in Debt? illustration of a person rolling up a large boulder with a money sign on it

If you are plagued with debt then you might be worried that you won’t be able to purchase a life insurance policy, but the opposite is actually true. Life insurance companies will approve anyone trying to buy a plan even if they are in debt: after all, you need a policy just as much as other people. In fact, you might have even more reason to buy a life insurance plan, so you can help your family pay off your debt and then some when you are gone. 

And fortunately, life insurance premiums are normally inexpensive monthly payments: they can be as low as $30 a month for a healthy 30-year-old. Because policies are so affordable, it’s better to buy now rather than later, since you could end up paying more in life insurance premiums as you age. That’s because the older you get, the more you will pay in premiums for your policy, so it is better to find a plan now that will offer your family financial security at a low rate.

Will Debtors Take Money From Your Policy?

Now you know that it’s possible to buy a policy even if you’re in debt, but will the money go right to your family, or will your debtors come knocking at your door after your passing and claim your death benefits?  Fortunately, life insurance is not like other assets: your home, cars, personal belongings, and bank accounts all go into an estate when you pass, which can be used to pay off your debts before the remainder of the money goes to your loved ones. But with life insurance, your beneficiaries will receive the death benefit payout directly and will then be able to spend it however they choose. 

Looking For An Affordable Plan?

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You can still find a great and affordable plan by comparing plans from different companies.

Your family has financial obligations that will not go away when you are gone: they will need your help more than ever with their expenses, and the last thing you want them to worry about while they are grieving is money. The best way to find an affordable life insurance plan, even if you are in debt, is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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