Does Life Insurance Have To Be Used To Pay Debts?

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    Larry GilmorePRO
    Agent Owner, Gilmore Insurance Services, Marysville, Washington State
    Unless the benefit is assigned to repay debts, the short answer is no. Life Insurance is a special product that does a simple thing, that is create a pool of money to be used for anything the beneficiary wants to use it for. The only exception possible to a debt is a debt to the government.
    Answered on April 18, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    Life insurance proceeds go to the policy beneficiaries. In domestic scenarios, the proceeds generally pass to them tax free. Although paying off debt is a worth target for death claim money, it is not required. However, if the death benefit was collateralize, that might make the collateral holder in first position for the payout.
    Answered on May 27, 2013
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