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If You Have A Death Benefit On Your Credit Card

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If you have a death benefit on your credit card, and have a balance when you die, the total amount of debt outstanding on the date of death will be paid off.

You can generally purchase something right up to the moment of death and it will be paid for by the death benefit.

To maximize use of the card (and increase the value of your estate):

  • Only pay the minimums due each month. The death benefit will pay off the balance.
  • Consider charging medical bills as you get a medical service. Although the custom may be to pay bills such as hospital bills when the patient is discharged, bills can be paid as time goes along. If you have insurance, your insurance company can reimburse your estate later.
  • If you can write checks on the account, check to see if there are any restrictions about the timing of writing checks and the purpose.
    • Consider writing a check for the credit limit to pay existing bills - or write a check to someone you care about. NOTE: As a matter of law, a check becomes invalid on death so checks you write should be deposited as soon as possible so they have time to clear "just in case."
    • Consider purchasing an asset your heirs can use. The Wall Street Journal reported on one fellow who used a check written on his credit card to pay for a down payment on a car. He obtained credit life insurance on the balance due for the purchase price. When he died, his wife received the car free and clear thanks to the combination of the death benefit on his credit card and the credit life insurance.

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