Many U.S. consumers are hazy about what happens to debt after death.
Ethos, a company that sells life insurance online, has published data on that knowledge gap in a summary of results from a survey of 1,978 U.S. adults ages 20 and older.
A polling firm conducted the survey for Ethos in December, before COVID-19 had attracted much attention in the United States.
Ethos found that 38% of the survey participants said they were unsure how life insurance works.
About 82% said they value the idea of leaving behind a strong financial legacy, but 39% said they did not think they would leave behind a strong financial legacy.
And many participants seem to have avoided thinking about what would happen to their debt if they died suddenly.
- A copy of the Ethos consumer survey report is available here.
- An article by Peter Colis is available here.
Here are some of the gaps in debt-death knowledge:
- 36% of the survey participants didn’t know that, when someone dies, their relatives could be responsible for paying off their debt.
- 42% didn’t know that the debts of someone who has died must be paid off before the assets can be liquidated.
- 64% were unaware that relatives of people with student loan debt may end up having to pay off the student loans.
Peter Colis, the chief executive officer of Ethos, said in a comment included in an announcement of the survey results release that it was clear that many of the survey participants weren’t financially prepared for death.
“Now, what was unimaginable for most has become a reality for many,” Colis said.
— Read Robert Downey Jr., Jay Z, Durant Back Life Insurance Startup, on ThinkAdvisor.