February 23, 2024

No one wants to deal with financial stress after the death of a loved one. While most life insurance policies are designed to help you and your family pay for living expenses after the death of a parent or partner, some people still have difficulty managing the expenses that arise between death and life insurance payouts.

For example, you may have to pay your mortgage or funeral expenses. You may also be responsible for the costs associated with hospital visits and hospice care, from medical bills to hotel room costs, not to mention additional costs for food, transportation, childcare and other basic necessities. All of these can come up some time after you make your claim and before you receive your death benefit.

No matter the benefit amount, waiting for payment can be challenging.

That’s why we interviewed CFP Professional and CEO Taylor Kovar. TheMoneyCouple.comhow people deal with costs that may arise before the death benefit arrives.

“During challenging times, being resilient is critical,” Kowal told us. “Even in the face of the unexpected, financial solutions exist.”

Here are some solutions he suggests:

in the text:

Leverage your emergency fund

Some people can pay for the costs between accidental death and life insurance payouts by withdrawing money from a savings account. “Use any savings you may need to cover immediate expenses, if possible,” advises Kowal.

In the best case scenario, you’ll have an emergency fund to draw on. In other cases, you may have to spend money you would have spent on a vacation, a down payment, or a retirement account. (Be aware that there may be tax implications for withdrawing money from a retirement account.)

Keep in mind that you may be able to supplement your savings after your life insurance payout arrives — it’s always smart to put part of your death benefit into an emergency fund.

“Having an emergency fund is like having a superhero in your financial corner,” Kowal explains. “It provides a buffer during these difficult times, preventing you from falling into financial abyss.”

Most financial experts recommend putting 3 to 6 months of expenses into an emergency fund, but if that’s not possible right now, a little help can help.Kovar Recommendations Save at least $1,500 First, continue to build your emergency fund as your financial situation improves.

Apply for a personal loan

If you don’t have enough savings to cover the financial gap before your death benefit arrives, you may consider taking out a personal loan.

“Personal loans can serve as a temporary bridge to financial stability when life goes wrong,” Kowal tells us. “Discuss options with local banks, compare rates and assess repayment terms.”

If you decide to borrow money to cover expenses until you receive your life insurance payout, try to use as much of the life insurance payout as possible to pay off the loan in full. By creating a plan to pay off your loan as quickly as possible, you’ll be better able to handle temporary financial burdens without taking on long-term debt.

“Borrowing should be a deliberate decision to avoid further financial stress,” Kowal advises.

connect with family and friends

In some cases, family and friends may have resources to help you and your loved ones with everyday expenses until your life insurance benefits arrive. Even if your friends and relatives can’t provide cash, they can still provide invaluable help with child care, home-cooked meals, or transportation.

“The power of community in times of need is amazing,” Kowal said. “Consider seeking financial assistance from family, friends or even crowdfunding platforms. People are often willing to lend a helping hand in difficult times and collective community support can provide needed relief.”

If you borrow money directly from family or friends, try to pay them back with your life insurance benefits when the funds arrive. Borrowing money from loved ones works best when the loan is repaid in a timely manner. Even better if you can provide similar resources to family and friends when they need a little extra help.

Contact your life insurance company

If you have questions about your life insurance benefit options or want to know how long it may take to receive your life insurance payout, please contact your life insurance company directly. “Communication is critical during this time,” Koval said. “Contact your life insurance company to ask about payout schedules and discuss any immediate financial concerns.”

You may also want to speak to a financial advisor, especially if you’re trying to decide whether to receive your life insurance benefits in one lump sum or in installments in the form of an annuity. “Seeking guidance from a financial planner can provide valuable insight based on your specific situation,” Kowal explains.

With an average life insurance payout of just over $600,000 at Haven Life, many beneficiaries may not know how to handle unexpected sums while mourning a loved one. A good financial advisor can not only help you manage your life insurance payouts, but also help you figure out how to pay for your life insurance payouts before they arrive.

After all, that’s why we reached out to Tyler Kowal, and why he hopes his advice will help you and your loved ones.

our editorial policy

Haven Life is a customer-focused life insurance organization backed and wholly owned by MassMutual. We believe that decisions about life insurance, personal finances and overall health can be simple.

our editorial policy

Haven Life is a customer-focused life insurance organization backed and wholly owned by MassMutual. We believe that decisions about life insurance, personal finances and overall health can be simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life less difficult if they are appropriate for your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide tax, legal or investment advice and should not be relied upon. Individuals are encouraged to seek advice from their own tax or legal advisors.

our disclosure

Haven Term is a term life insurance policy (DTC and ICC17DTC in some states, including North Carolina) issued by MassMutual, Springfield, MA 01111-0001, through Haven Life Insurance Agency, LLC Exclusively available. In New York State, the safe harbor deadline is DTC-NY 1017. In California, the safe harbor deadline is DTC-CA 042017. Simplified Safe Harbor Term is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in some states (including North Carolina)) issued by CM Life Insurance Company, Enfield, CT 06082. Policy and add-on form numbers and features may vary by state and may not be available in all states. Our agency license number is OK71922 in California and 100139527 in Arkansas.

MassMutual is rated A++ (Superior; Top Category 15) by AM Best Company. This rating is as of April 1, 2020 and is subject to change. MassMutual Financial Services has received varying ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is part of a Haven Term policy that provides additional services and benefits for free or at a discounted price. This rider is not available in every state and may change at any time. Neither Haven Life nor MassMutual are responsible for providing the benefits and services under Plus Rider, which are provided by third party vendors (partners). For more information on Haven Life Plus, visit:

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