Tips for Leaving Behind Financial Security to your Loved Ones
You may think you are prepared when you die. And your family will be well taken care of. But
let’s give you a real-life scenario. A dad of two passed away unexpectedly from a heart attack. The wife did not know where the finances were nor what state the credit cards were in. The daughter was left to sort through the details resulting in no financial security for the family.
The end result? The family soon discovered that there was credit card and medical debt and had to tend to these expenses. As a result, there was no money left to pay for a funeral. So they turned to Go Fund Me and created a page to get help paying for the funeral costs. When this family should have been grieving, they were left scrambling last minute. This was both emotional and embarrassing for this family. But this scenario may have been different had their dad planned for his family’s financial security before his passing.
Address debts now
So what can you do to ensure this does not happen to your family? Plan ahead. More than ever seniors are carrying some debt. According to the National Council of Aging, the percentage of households headed by an adult aged 65 or older with any debt increased from 41.5 percent in 1992 to 51.9 percent in 2010 to 60 percent in 2016. And the median total debt for older adult households with debt was $31,300 in 2016 – more than 2.5 times what it was in 2001.
If you have any debts like this, address them now so your loved ones won’t have to. Here are the two most common sources of debt and what can be done to resolve them before you pass.
1. Credit cards
If you have credit card debt, it’s important to find a way to pay down these debts so your family does not inherit these. Here are some solutions to do so:
● Refinancing home
If you have owned your home for a long time, chances are your remaining mortgage payments are low as well. Consider refinancing your home and using this money to pay off or at least down your credit card payments.
● Home equity line of credit
Another option is to take out a home equity line of credit. Again, if you have a little left to pay on your home or owe less than the your home is worth, this may be a good option. This will allow you to use the money from this line of credit to pay down your credit cards.
● Reverse mortgage
If you are 62 or older, you can borrow against the equity in your home. In this case you get a lump sum of money from your bank. This money is then given to you from the bank in monthly installments. The money goes back to the bank once your home sells.
● Selling assets
You may be living happily independently in your home, but everyone has assets they could sell. It could even be therapeutic to declutter your home. Consider having an estate sale. There are several companies that can help sell some of your items. This cash can easily be used to pay down or even off your credit card expense.
2. Medical bills
Another source of unpaid expense when you pass is often times medical bills. Since you want your family to have financial security in the future, plan to manage these medical bills now. Here are some ways to pay off or down those medical bills.
● Check for errors
A lot of times medical bills begin to pile up and you are still in the recovery process. You simply put the bills aside and focus on your health. Step number one is reading through these hospital and other bills. Check for accuracy. Were you doubled billed for something? Was a test categorized wrong? Errors are common and not fact checking can lead to overpaying.
● Negotiate payment options
Instead of dodging hospital or even debt collector calls, work with them. Chances are you can work out a flavorful payment plan. This may include paying in easy installments. Also, try asking for no interest added. And if your procedure was not covered by insurance, ask if you can pay the insurance rate which may be less than what the hospital charged.
● Help with payment
Ask for help. All hospitals are required to offer assistance to low-income patients who can not pay their bills. However, you will need to show proof of this. If you are not low-income, but still can not pay, try applying for financial assistance. It can’t hurt to at least apply. And ask the hospital if they offer assistance to all patients regardless of economic status. Again, it does not hurt to ask. Maybe they have a plan you are not familiar with.
● Advantages of Medicare
As soon as you turn 65 take advantage of Medicare. There are several ways to save on medical expense using this healthcare. One is no co-pays.
Final expense insurance for debt relief
If you think you will still have debt when you pass, the best option for your family’s financial security is to purchase final expense insurance now. Final expense insurance is simply an affordable solution designed to pays bills that your loved ones will encounter after your death. Some of these costs may be medical bills, funeral expenses, cremation costs and credit card debt. Final expense insurance may also be referred to as burial insurance.
This way your loved ones will have a way to pay for any expenses left behind. And getting final expense insurance can be as easy as an online application with no medical exam needed.
Insurance for financial security
It’s important to plan ahead. You may have debt such as credit card or medical bills. Take steps to pay down as much of this debt as you can first. You want to leave your family with financial security. Once you have done this, it’s important to purchase final expense insurance to cover your remaining debt. Being prepared alleviates the stress of debt.