Question

Chi and Daniella are your clients and you are assessing their current financial situation and how it impacts their insurance needs. Chi and Daniella are married and they have a mortgage on their home and a joint credit card with an outstanding balance. In addition, Chi has a car loan. Should Chi pass away, which of the following is a correct statement which describes the probable treatment of their debts?

a) the mortgage will be automatically extended to Daniella as survivor spouse

b) the credit card limit may be lowered

c) the car loan will become Daniella’s obligation as survivor spouse

d) all of the outstanding debts will have to be paid off by Daniella

Answer 1

Solution:-

When a person dies, the lenders can force recovery of their dues through the estate and assets of the deceased. In this case, if Daniella would be the beneficiary of Chi's wealth on his death and therefore if she doesn't take up the responsibility of paying off Chi's loans, the bank would sell off the house, car or other assets Chi owned.

Thus, Daniella would have to pay off all the outstanding debts of Chi.

Therefore, the correct option is option d.