The passing of a loved one can leave heirs grappling with financial stress amidst their grief. Expenses such as funeral costs, lost income, and medical bills can pile up. Life insurance can help cover many of these costs, but is it required to be used for medical debt?
Understanding Life Insurance
Life insurance through OnQuote Insurance is procured while a person is alive. Upon their death, the life insurance company disburses a death benefit to the beneficiaries. A portion of the death benefit may be automatically directed to the funeral home to cover funeral costs if the beneficiaries agree to this arrangement. The remaining amount is then issued to the heirs.
Is Life Insurance Required to Pay Debt?
Life insurance in Wisconsin can be used to settle debt, including medical bills, but it is not usually obligated to do so. Death benefits are paid directly to beneficiaries, so they’re typically not considered part of the estate. Creditors can only claim against the estate to recover debts that were previously owed.
Who is Responsible for Medical Bills?
If people aren’t required to pay medical bills when someone passes away, what happens? The estate settles unpaid medical bills. The estate comprises all the deceased person’s assets, including property, bank accounts, and other financial holdings. The executor, who is responsible for ensuring the will is carried out and managing the estate, usually handles this process through the court. The estate may be liquidated piece by piece to satisfy creditors. However, survivors are not typically responsible for medical bills.
One exception to this general rule is that some jurisdictions, such as Ohio, have a clause stating that a surviving spouse may be responsible for unpaid medical debt. Working with a knowledgeable insurance company, like OnQuote Insurance, is crucial for understanding Wisconsin law. Contact us today to learn more!