Life insurance can be used to pay off debts and bills, to protect cosigners, and help with funeral expenses. Your beneficiary can choose to use the money for the purpose they see fit.
If the debt was only in your name then no other individual person is responsible for your debt. However, the collector can go after assets under your name, such as your house or life savings. If you don’t have any assets and you name your spouse or children as the beneficiary of your life insurance then debt collectors can’t touch that money.
Your beneficiary may choose to use the money from your life insurance policy for any purpose, including to pay off debt.
Many people buy life insurance to replace income, pay for their final expenses, pay off debt, provide for college educuaiton for their kids, provide for their spouse's retirement, maintain lifestyle for their family, or to leave money to a charity, among other things.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.