Does Life Insurance Have To Be Used To Pay A Deceased Person'S Bills? 
Life insurance does not have to be used to pay a deceased person 's bills if the beneficiary is a person . If the beneficiary is the deceased person 's estate , the life insurance proceeds will most likely go through probate , at which time they become a target for bill collectors . Also , if the policy proceeds are assigned to a funeral home or other lender , these institutions are able to take their share of the policy proceeds first . 