If We Have A Foreclosure And We Die, Will Our Life Insurance Go To Our Kids Or Pay The Foreclosure?
Posted February 5, 2010 – 4:43 pm in: structured settlements FAQWe just want to make sure that if one or both of us was to die, that the life insurance would still be there for the beneficiary and not go to the bank. We have 4 small children to care for. My husband lost his job during the housing slump and therefore we lost our home. We have just gotten back on our feet and want to make sure our children will be financially secure. the house was only in his name.
Tags: Foreclosure, Have, Insurance, Kids, Life, Will
6 Comments
The insurance proceeds will be distributed to the beneficiaries of the policy.
Especially if you just lost the house, there is probably nothing further to worry about. But what you’re concerned with is that the house sold at the sheriff sale for less than what you owed on the loan right?
But there’s really not much to worry about at all.
The bank could not go after any other assets after the foreclosure without getting a deficiency judgment, which is not allowed in all states.
Even in the states where it is allowed, banks rarely go after the homeowners who lose their homes. They know that you don’t have a lot of money or assets right after losing your home, and if you couldn’t pay the regular mortgage, how will you ever be able to pay tens of thousands of dollars in a judgment? So there’s no real reason to worry about that.
The life insurance proceeds will be secure from your old mortgage company.
Good luck.
ForeclosureFish
Most life insurance policies have clauses to protect them from making payments in the event of sucide. If sucide can be proven in court, then the beneficiary will not receive anything.
There are lots of other options. But you must seek counsel from a GOOD Samaritan. Try looking for HIM in a church near your home rather than through the internet.
As an earlier poster stated it is important that your children are named as the beneficiaries rather than the estate. The best set-up would be for the policy to name the spouse as the first beneficiary and the children as the alternative beneficiary. It is very good that you kept up your premium payments during a difficult financial time. I hope that you have inexpensive term life policies.
The life insurance goes to the beneficiaries. No one else has the right to it. However, please don’t plan to die soon. Your kids need you more than the money.
Life insurance goes to the named beneficiaries. It does not become part of the estate unless the estate IS the named beneficiary or there are no living beneficiaries left.
My understanding of the law, and I am not a lawyer, so ask your insurance agent as there is no reason for him not to know the answer definitively is that your beneficiaries will get the money.
IF you named your estate, then the creditors can collect it.
I hope as you have 4 kids that you have done the 25% EACH thing so there’s no fighting over that.