It could, if your beneficiary wants to use the money toward that, but your life insurance payout isn’t going to your estate, which probably would be legally obligated to make payments to the credit cards. Instead, your life insurance payout is going to your named beneficiaries. If a beneficiary that receives life insurance money is a co-signer on your credit card, then, yes, he or she might want to use some of the life insurance money to pay off any credit card debt.