Life Insurance to Pay off Debt
How to Buy Life Insurance to Pay off Your Debt
If you have loved ones who rely on you for financial support, and you have debt, you may be considering the purchase of a life insurance policy.
Why Buy Life Insurance If You Have Debt?
It’s simple. The death benefit paid to your beneficiary upon your passing can be used to pay off all of your existing debt.
That’s right. Any money from your life insurance plan can help your family pay off or pay down the debt you leave behind.
Common Types of Debt
So, What Kind of Debt Do You Currently Have?
There are several different types of debt common to a majority of people, including:
- Mortgage Loan
- Auto Loan
- College Loan
- Personal Loans
- Credit Cards
- Healthcare and Hospital Bills
- Dental Bills
- Outstanding Taxes Owed to the IRS
- Outstanding Child Support Owed
- Money Owed to Family, Friends and/or Business Associates
Remember, the death benefit paid out is free from federal income taxes, and can be used by your beneficiary for any purpose they choose to use it for, including to pay off any/all outstanding debts and to cover the cost of your final expenses, including your funeral and burial.
Many people purchase a life insurance plan when they buy a house or condominium. They want to make sure their family can remain in their home should the main breadwinner pass away before the mortgage balance is fully repaid.
It’s important to make sure you provide your loved ones with the financial security they deserve, and make certain they can remain in their home without the financial stress of trying to find a way to replace your income, especially while they are mourning your passing.
How Much Life Insurance to Buy
How Much Life Insurance Do You Need?
If you want to buy life insurance to pay off your debts, then the first thing you’ll want to do is make a complete list of every debt you owe as of today.
That’s right. Get out all of your bills and add up the total amount you currently owe money on, including the list of common debts noted above.
Once you have your total, that’s the amount you need in life insurance coverage to provide the funds necessary to pay off your bills you currently owe money on.
Yes, if you don’t die today, you will be paying down the bills over time.
However, you may take on additional debt over the years, depending on your family’s needs.
The most accurate amount of life insurance protection you need is the amount you currently owe based on your calculation of total debt as of right now.
So, get out the calculator and start adding up your debt. It’s probably more than think.
Don’t worry. The important thing is that you are making the right decision to buy life insurance that will protect your loved ones and secure their future so they aren’t left with your debt when you die.
You might as well go ahead and add $8,000 to your total to provide the funds needed for your final expenses, including the cost of your funeral and burial.
The average cost including all related expenses is currently around $8,000 to cover final expenses. That amount includes the cost of a burial plot, casket, headstone, memorial service, funeral, hearse, embalming, and burial.
What Type of Life Insurance to Buy
If you want to get life insurance to pay off debt you’ll need to choose a plan that meets your needs and fits your budget.
There are two basic types of life insurance policies: Term and Permanent.
Term life insurance is temporary coverage lasting for a specific number of years. Usually, you can choose coverage for a Term of 10, 15, 20, 25 or 30 years.
Permanent life insurance is coverage guaranteed to last your entire lifetime, which is why it costs up to 5-10 times more than the same amount of term life protection.
IMPORTANT: Decide how long you really need your life insurance policy to last. If you need protection for a duration of 30 years or less, then Term life insurance is the most affordable option by far.
Shopping for The Best Price on Life Insurance
Now that you have an accurate estimate of how much life insurance you really need, based on your outstanding debt as of today, it’s time to find the best price on quality life insurance protection from a highly-rated insurance company.
How Can I Find the Best Price on Life Insurance?
It’s simple. You just request a free life insurance quote online by visiting a life insurance quote provider, and filling out a short quote request form, which will ask you some basic questions about your age, gender, tobacco use, health, duration of your policy term, and amount of life insurance you need.
Then, you just click on a button, and instantly receive the lowest price quotes from up to 40 of the leading life insurance carriers in the USA.
It only takes a minute or two to receive your free life insurance quote comparisons.
Life Insurance Quotes
Top Pick – JRC Insurance Group
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Life Insurance to Pay Off Debt
Disclosure: Compensated Affiliate