Debt Insurance for spouse.

[vision3]

What is the name of your state? Philadelphia, PA

My mom is worry that once my stepfather pass away she wont be able to pay the debt he owes. We actually calculated that the total amount of payments she needs to make after he is gone will overpass what she gets monthly. Is there such thing as a debt insurance that will help her paid all of it or at least %50 of it in the event of his death?

 

[moburkes]

What is the name of your state? Philadelphia, PA

My mom is worry that once my stepfather pass away she wont be able to pay the debt he owes. We actually calculated that the total amount of payments she needs to make after he is gone will overpass what she gets monthly. Is there such thing as a debt insurance that will help her paid all of it or at least %50 of it in the event of his death?

That's just called life insurance. She can use it to pay off his debts.

Individual creditors offer credit insurance that will pay off the loan in the event of permanent disability or death. However, you purchase it directly with those creditors. For example, credit card companies charge you based on your balance, and auto loan companies add it to your car payments.

 

[vision3]

Thank you for your quick response.

 

[Betty]

If your mom is going to be listed as the beneficiary on the life ins. policy, the proceeds would be payable to her at your stepfather's death to do with as she wishes (it passes outside of the estate as long as estate is not bene) - if she so desires, she can pay debts with the proceeds but creditors will not be able to come after the life ins. money. If the estate is named bene, then the proceeds would be part of the estate & subject to claim by creditors for payment of debts owed. However, let me ask you, is your stepfather sick? If so, he may not qualify for a life ins. pol. because of his health. Most policies are underwritten in regard to med. hx. There are some policies (usually for small amts.) that are sold through the mail, on TV ads, on the internet, etc. where you don't need to answer any medical questions but normally they will not pay the policy's face amt. if death is within the first two years after the policy's effective date (to protect theirselves from claims - otherwise, every sick person would be taking out these policies). Most though will return the prems. you had paid prior to death if you die within the first two years.