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How to cover expenses before a life insurance payout arrives

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 cover living expenses after a parent or partner passes away, some people still have trouble managing the expenses that occur between the time of death and the life insurance payout.

For example, you may have a mortgage payment to pay or a funeral to pay for. You may also have costs associated with hospitalization and end-of-life care, from medical bills to hotel rooms — not to mention the extra money that goes toward food, transportation, childcare and other basic necessities. All of this can come up in the time after you submit an application, but before you receive the death benefit.

Waiting for the payout process can be challenging, regardless of the benefit amount.


7;s why we asked Taylor Kovar, Certified Financial Planner professional and CEO of TheMoneyCouple.com, how people could manage the expenses that can come up before a death benefit arrives.

“During challenging times, it’s important to remain resilient,” Kovar told us. “There are financial solutions, even in the face of unexpected circumstances.”

Here are some of the solutions he suggested:

In this article:

Use your emergency fund

Some people may be able to cover expenses between an unexpected death and a life insurance payout by withdrawing money from their savings accounts. “If possible, tap into any savings you may need to cover immediate expenses,” advises Kovar.

In the best case, you have an emergency fund to tap into. In other cases, you may need to spend money that would otherwise go toward a vacation, a down payment, or a retirement account. (Just note that withdrawing money from a retirement account may have tax consequences.)

Keep in mind that you may be able to top up your savings after your life insurance payout has arrived – and putting a portion of your death benefit into your emergency fund is always a smart move.

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

Most financial experts recommend keeping between 3-6 months worth of expenses in an emergency fund – but if that’s not possible right now, every little bit helps. Kovar suggests saving at least $1,500 to start with and continuing to build your emergency fund as your financial situation improves.

Take a personal loan

If you do not have enough savings to cover the financial gap before a death benefit arrives, you may consider taking out a personal loan.

“When life throws curves, personal loans can act as temporary bridges to financial stability,” Kovar told us. “Explore options with local banks, compare interest rates and evaluate repayment terms.”

If you decide to borrow money to cover expenses until you receive a life insurance payout, try to use as much of your life insurance payout as possible to pay off your loan in full. By making a plan to pay off your loan as quickly as possible, you will be better prepared to handle the temporary financial burden without going into long-term debt.

“Borrowing should be a well-thought-out decision to avoid further financial stress,” advises Kovar.

Reach out to family and friends

In some cases, family and friends may have the resources to help you and your loved ones cover day-to-day expenses until your life insurance benefit arrives. Even if your friends and relatives can’t contribute cash, they may still be able to provide valuable help with childcare, home-cooked meals or transportation.

“In times of need, the power of community can be astounding,” says Kovar. “Consider reaching out to family, friends, or even crowdfunding platforms to seek financial support. People are often willing to lend a helping hand during difficult times, and collective community support can provide much-needed relief.”

If you borrow money directly from family or friends, try to pay it back from your life insurance benefit when it comes. Lending money to loved ones works best when the loans are repaid promptly. And if you can offer similar resources to family and friends when they need a little extra help, that’s even better.

Contact your life insurance provider

If you have questions about your life insurance benefits or want to know how long it may take to receive your life insurance payout, contact your life insurance provider directly. “Communication is critical during this period,” says Kovar. “Contact the life insurance provider to ask about the payout timeline and discuss any immediate financial concerns.”

You may also want to consult a financial advisor, especially if you are trying to decide whether to receive your life insurance benefits as a lump sum or spread over time in an annuity. “Seeking guidance from a financial planner can provide valuable insights tailored to your specific circumstances,” explains Kovar.

At Haven Life, the average life insurance payout is a little over $600,000, and many beneficiaries may not know how to handle an unexpected amount of money while grieving a loved one. A good financial advisor can help you not only manage your life insurance payout, but also help you figure out ways to cover your expenses before your life insurance payout arrives.

That’s why we reached out to Taylor Kovar after all — and why he hopes his advice will help you and your loved ones.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly 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 a little less difficult if they fit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide and should not be used for tax, legal or investment advice. Individuals are encouraged to obtain advice from their own tax or legal advisor.

Our disclosures

Haven Term is a term life insurance policy (DTC and ICC17DTC in some states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in some states, including NC) issued by CM Life Insurance Company, Enfield, CT 06082. Police and driver form numbers and features may vary by state and may not be available in all states. Our agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by AM Best Company as A++ (Superior; Top category of 15). The rating is valid from 1 April 2020 and is subject to change. MassMutual has received different ratings from other credit rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The driver is not available in all states and is subject to change at any time. Neither Haven Life nor MassMutual is responsible for the provision of the benefits and services made available under the Plus Rider, which are provided by third party providers (partners). For more information about Haven Life Plus, visit: https://havenlife.com/plus

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