A common question we often get is whether or not creditors can claim their life insurance. Generally speaking, creditors cannot take death benefits from your beneficiaries even if you have accumulated debt. However, there are a few exceptions. For example, creditors can claim the death benefit. If you list your estate as a beneficiary, this will make the funds available to pay any of your outstanding debt. Another way creditors may take your death benefit is if they are paid to someone with whom you shared financial accounts. So if you and your spouse had joint accounts, the death benefits may be subject to those debts. Death benefits can also be claimed by creditors if the beneficiary has accumulated debt, meaning that as soon as they receive those proceeds, it becomes part of their assets, which creditors can claim if they owe money while it is unlikely that creditors will be able to take your life insurance. It is important to understand the exceptions. If you have any questions about your specific situation, we recommend talking to a trusted financial advisor or insurance agent.

We’d be happy to review your insurance coverage options with you! Give us a call at 440-729-4042 or visit https://luczkowskiagency.com.