an older man walks away from two younger relatives holding an urn full of money

Michelle Kondrichl

46% of Americans expect to pass on debt to their loved ones when they die

The Policygenius 2024 Financial Planning Survey found wealthier Americans are most likely to expect their debts to outlive them.

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a certified personal finance counselor and former senior reporter at Policygenius, where he covered insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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The total U.S. household debt has increased by a staggering $2.9 trillion since the end of 2019. [1] Meanwhile, nearly half of American adults (46%) expect that if they died today, their loved ones would inherit their debt. That’s according to the Policygenius 2024 Financial Planning Survey, which also found that the more your household earns, the more likely you are to pass down debt when you die. 

Key findings

  • Among people who expect their loved ones to inherit their debt if they die, 21% have no life insurance coverage in their household.

  • 58% of people earning at least $150,000 expect their loved ones to inherit their debts when they die.

  • A smaller percentage of Black Americans (38%) expects to pass down debt than white or Hispanic Americans (48% and 46% respectively).

  • People living with children are less likely (70%) to view the main purpose of life insurance as a way to provide for their dependents in the event of their death, compared to 80% of people without children. Instead, people living with children are far more likely to view insurance as a way to invest and grow money (23%, vs 11% of people without children).

  • 17% of millennials expect their loved ones would have to cover their student debt if they died today, compared to 7% of Generation X and 2% of baby boomers.

Roughly 1 in 5 who expect to pass down debt don’t have life insurance

When someone dies, loved ones only inherit debt when they co-own the debt themselves, usually because they’re a co-signer, a joint account holder, or a surviving spouse in a community property state. And if you inherit a house with an outstanding mortgage, you are also responsible for payments.

Life insurance is one way to cover shared debt in the event that one of the co-signers dies. Among people who expect their loved ones to inherit their debts if they die, 74% have some kind of life insurance coverage in the household. But 21% live in households where no one has life insurance, and 5% who expect their loved ones to inherit their debts don’t know about their household’s life insurance coverage.

q1 debt after death survey

Wealthier people are more likely to pass on debt

Having debt isn’t necessarily a marker of financial trouble. According to our survey, the more someone earns, the more likely they are to say their loved ones would need to pay their debts if they died today. 58% of people earning $150,000 or more per year said their loved ones would have to pay for some form of debt if they died, compared to 47% of Americans earning less than $150,000.

q2 debt after death survey

Wealthier people with higher credit scores can borrow money more easily for big purchases like houses, cars, and higher education, and people earning more than $150,000 are almost twice as likely (54%) to own real estate as those earning less (29%). 

However, the highest-earning Americans may also be the best prepared to help their loved ones pay off debts. Only 13% of those earning at least $150,000 per year live in a household where no one has life insurance, compared to 31% of those earning less than $150,000.

The racial wealth gap is also a racial debt gap

The real estate ownership gap is even more stark when comparing white, Black, and Hispanic Americans. 37% of white Americans own real estate, compared to 15% of Black and 14% of Hispanic Americans surveyed. The racial housing gap has grown since 1960, according to Census data analyzed by Policygenius. Racial disparities in debt are closely tied to racial disparities in wealth. Black and Hispanic Americans have a harder time accessing credit to make larger purchases, like real estate, that can help them build wealth and pass it down to future generations. [2] Because of that, mortgage debt is a sign of wealth, and White Americans are more likely to expect to pass it down than Black or Hispanic Americans.

q3 death and debt survey

Most parents expect to pass on debt

Expecting to pass down debt is strongly associated with having kids, according to the survey. 60% of Americans living with children (including adult children) say their loved ones would need to pay their debts if they died today, compared to just 38% of those who don’t live with any children, regardless of age.

q4 debt after death survey

Among those living with children and with debt to pass down, 82% live in households with life insurance coverage, indicating that many have a plan for helping their loved ones cover their shared debts if they die. 

However, only 70% of those living with children view life insurance primarily as a way to provide for their dependents, compared to 80% of people without children. Instead, 23% of those living with children and expecting to pass on debt view life insurance mainly as a way to invest and grow money, which is only possible with permanent life insurance policies that accrue cash value. Some life insurance products, like whole or permanent policies, have a cash component that can be used as a way to grow money in addition to the regular death benefit.

q6 debt and death survey

There’s also a generation gap when it comes to views on life insurance. Millennials and Gen Z are more likely to view life insurance as an investment than baby boomers.

q5 debt after death survey

Not surprisingly, baby boomers, who’ve had more time to pay off debt, are less likely to say their loved ones would need to pay their debts if they died than millennials (43% vs. 52%). The biggest difference-maker was student debt, which 17% of millennials and 16% of Generation Z expect their loved ones to cover if they died today, compared to just 2% of boomers.

Methodology

Policygenius commissioned YouGov to poll 4,063 Americans 18 or older. The survey was carried out online from Oct. 16 through Oct. 19, 2023. The results have been weighted to be representative of all U.S. adults. The average margin of error was +/- 2%.

About Policygenius

Policygenius transforms the insurance journey for consumers by providing a one-stop platform where consumers can compare options from top insurance carriers, get unbiased expert advice, buy policies, and manage their insurance portfolio, in one seamless, integrated experience. Our proprietary technology platform integrates with the leading life, disability, and home & auto insurance carriers and delivers an exceptional digital experience for both consumers and insurance carriers. Since 2014, our content, digital tools, and experts have served as a resource for millions of people on their insurance journey, and we have sold more than $200 billion in coverage. In 2023, Policygenius was acquired by Zinnia, an insurance technology and digital services company.

For reporters

To request more information about the data, or to speak with one of our experts, contact press@policygenius.com.

Infographics by Anna Konson

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of oureditorial standards.

  1. Federal Reserve Bank of New York

    (Research and Statistics Group). "

    Quarterly Report on Household Debt and Credit

    ." Accessed January 03, 2024.

  2. Aspen Institute

    (Financial Security Program). "

    Disparities in Debt: Why Debt Is a Driver in the Racial Wealth Gap

    ." Accessed January 03, 2024.

Corrections

No corrections since publication.

Author

Myles Ma, CPFC, is a certified personal finance counselor and former senior reporter at Policygenius, where he covered insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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