Nearly one-third of Americans surveyed by Securian Financial Group say they haven’t thought about what would happen to their debt if they – or their cosigners – were to pass away unexpectedly. Fewer than 13 percent say they have taken steps to protect themselves from the sudden loss of a borrower.

1. hij abc
Debt:
The inheritance
no one wants
Nearly one-third of Americans surveyed by Securian
Financial Group say they haven’t thought about
what would happen to their debt if they – or their
cosigners – were to pass away unexpectedly.
All generations wrestle with debt
Consumer debt spiked during the Great Recession, focusing the
nation’s attention on debt with an intensity not seen in decades. All
generations were affected.
Baby boomers, for example, grew up with the conventional wisdom
to “buy as much house as you can” because the widely held
assumption was that household income and home values would rise.
According to a Securian survey conducted earlier this year, however,
that rule of thumb had unfortunate consequences for boomers: The
number of pre-retirees who expect to carry mortgage debt into
retirement soared a stunning 123 percent between 2009 and 2013.
(Figure 1A)
In the same survey, nearly half (49 percent) of retirees held debt
when they entered retirement. (Figure 1B and 1C) Of that group, 39
percent owed $50,000 or more. People who are 65 and older have
more credit card debt than any other age group – nearly $9,300,
on average.1
The third generation, Millennials, holds an unprecedented debt
burden in the form of student loans. One in 10 recent borrowers
defaulted on their student loans within the first two years – the
highest rate since 1995, according to the US Department of
Education. 2 At nearly $1 trillion, student loan debt is at a record high
and the average 25-year-old’s student loan debt was around $22,000
in 2012. 3
F78685-4 11-2013
November 2013

2. Figure 1. Retirees and debt
A. Expected vs. Actual Debt Upon Retirement
Mortgage debt
%
80
Expected Mortgage Debt
Had Mortgage Debt
70
60
%
80
67%
59%
53%
48%
50
B. Expected vs. Actual Debt Upon Retirement
70
Approximately, how much debt did you
carry into retirement?
71%
$1,000 - $2,499 2.3%
60
30
30%
30
49%
46%
40
30%
Less than $1,000 1.6%
67%
50
40
C. Retirees (n= 258)
30%
$2,500 - $4,999 8.5%
$5,000 - $9,999 10.9%
35%
$10,000 - $24,999 21.7%
20
20
$25,000 - $49,999 16.3%
10
10
$50,000 - $99,999 17.4%
0
2007
2009
2013
In 2007, 53 percent of retirees
surveyed carried debt into
retirement. By 2013, the number
of pre-retirees who expect to carry
mortgage debt into retirement
soared a stunning 123 percent.
%
80
70
60
50
40
30
0
2007
Expected Debt
2009
2013
$100,000 or more 21.3%
38% of retirees carried a total debt of
$50,000 or more into retirement.
36% of boomers expect to owe that
much.
Had Debt
%
80
70
60
50
40
Source: “Retirement time bomb: Mortgage debt,” Securian Financial Group, April 2013
30
20
20
Lopsided personal balance sheets
10
10
Among the respondents in Securian’s recent survey who hold debt as
0
0
2007
2009
2013
2007
2009
2013
primary borrowers or cosigners, significant percentages could leave
behind large financial obligations if they died suddenly. Twenty percent
owe $100,000 or more. Forty-four percent owe $25,000 or more.
(Figure 2)
The state of personal balance sheets also is worrisome. More than
half (56 percent) say their debts exceed their assets and 41 percent
say their debt is “much higher” than their assets. (Figure 3)
Figure 3. (n=802)
How does the amount of debt you hold compare to your
current savings or assets?
The debt is much higher
The debt is a little higher
They are about the same
The debt is a little lower
The debt is much lower
Total Responses
Percent
Count
41%
15%
13%
9%
23%
100%
329
123
100
68
182
802
Figure 2. (n=819)
Approximately how much debt do you
currently hold, including any debts or
loans you have cosigned?
Less than $1,000
$1,000 - $2,499
$2,500 - $4,999
$5,000 - $9,999
$10,000 - $24,999
$25,000 - $49,999
$50,000 - $99,999
$100,000 or more
11%
5%
7%
13%
20%
14%
10%
20%
20% owe $100,000 or more,
44% owe $25,000 or more.
Debt:The inheritance no one wants – November 2013 2

3. If no arrangements are made for post mortem debt coverage in
these cases, survivors are in the hole even after liquidating assets.
Figure 4. Have you ever considered what
would happen to your debts or loans if
you died? (n= 1,002)
Debt doesn’t always die with the borrower
No
When asked whether they had given any thought to what would
happen to their debt if they died unexpectedly, nearly one third
(31 percent) of all respondents answered, “No.” (Figure 4)
31%
Then the survey asked what they think would happen.
Across the various types of debt mentioned, approximately 10
percent believe that if they died unexpectedly the lender would
forgive the loan or it would simply go away. That number doubles for
student loan borrowers, some of whom may be eligible for federal
student loan forgiveness programs. (Figure 5)
69%
Yes
Figure 5. Think loan would be forgiven
%
20
15
10
N=
Credit Card
Mortgage
Student
Age range
Other Loans
10%
890
8%
Student
0
983
Mortgage
5
% Loan forgiven
Credit card
790
20%
Other loans
891
11%
Figure 6. Marital status (n= 1,001)
Widowed or
never married
33%
If there is no cosigner, the lender will seek to collect the debt from
the estate, which could result in the sale of assets including homes,
cars and other property. If a spouse, child, parent or anyone else
cosigned a loan with the deceased, the cosigners are liable for the
debt. A spouse is responsible in a community property state even if
he or she did not cosign the loan. That’s a lot of “ifs,” considering that
57 percent of the respondents are married and another 11 percent are
divorced or separated. (Figure 6)
When asked how they’d feel about saddling their survivors with
debt, their responses fell into three categories – regretful, prepared
or unconcerned.
“I would feel terrible. I do not like the idea of leaving my
mistakes to other people.”
“I would feel awful. But I have insurance as a part of my
payment plan to prevent that.”
“My ex can totally afford it.”
68%
Married, divorced or separated
Response
Percent
Count
Single, never married
22%
217
Married
57%
566
Divorced / Separated
11%
107
Widowed
3%
28
Unmarried, living with
significant other
8%
83
100%
1,001
Total Responses
“I’m sorry but I will be dead and they can figure it out.”
Debt:The inheritance no one wants – November 2013 3

4. Majority of cosigners step up for family
Among the 1,004 people who took Securian’s survey, nearly
one-fourth (24 percent) cosigned loans for others. Interestingly, the
percentage of cosigners is much lower among respondents who
currently have no debt of their own (11 percent). (Figure 7)
When asked to select all that apply, nearly half (46 percent) of the 238
cosigners share debt with their spouses. Nearly one-third (30 percent)
cosigned for their children. About one-tenth cosigned for parents or
other family members (11 percent and 10 percent, respectively).
Figure 7. Have cosigned loans
(n= 238)
%
100
89%
80
76%
73%
60
40
27%
Figure 9. (n=238)
For whom did you cosign? (select all that apply)
20
Percent Number
My spouse
46%
109
My children
30%
72
My parents
11%
27
Other family member
10%
0
23
Friend
9%
5%
When asked how they’d feel about being responsible for the debt if
their cosigners passed away unexpectedly, some expressed one form
or another of displeasure, including anxiety.
Hold debt as Do not hold debt as All respondents
primary borrowers primary borrowers
Not cosigners
24% cosigned loans for others.
Interestingly, the percentage of
cosigners is much lower among
respondents who currently have
no debt (11%)
12
Credit card debt, consumer loans and mortgages were most frequently
cited when asked to select all types of loans they’ve cosigned. A little
more than one-fifth (22 percent) cosigned student loans. (Figure 8)
11%
Cosigners
22
My ex-spouse
24%
Figure 8. What kind of debt/loan(s) did you
cosign? (select all that apply) (n= 238)
%
40
39%
“ … It would be a huge burden for me.”
30
“I would lose the car and ruin my credit.”
37%
34%
35
25
Others are prepared for the sudden loss of a cosigner.
“I would expect it. We are married and applied for it all
together.”
“I would be upset but that is the risk you take if
you cosign.”
22%
20
15
10
5
0
Credit Card(s)
Mortgage Student Loan(s)
Types of debt/loans
Other
Debt:The inheritance no one wants – November 2013 4

5. Huge majority of borrowers financially unprepared for
sudden death
When asked to select all the steps they would take to provide
financial protection as borrowers or cosigners, only 127 respondents
(18 percent) indicated they had no need or already have financial
protections in place.
Perhaps taking the survey will prompt the 698 others to take action.
More than half (55 percent) said they are most likely to draw up a will
to protect themselves or others from incurring debt upon the death
of a primary borrower or cosigner. Forty percent said they would buy
insurance to cover the debt. Nearly one-third said they would seek
financial advice and/or increase their individual insurance coverage
(31 and 30 percent, respectively).
Figure 10. (n=825)
There are a number of ways to protect yourself or
others from incurring debt upon death of a primary
borrower. Thinking about your debt situation,
which of the following preventative actions are you
likely to take? (select all that apply)
Percent
Number
Draw up a will
55%
455
Buy insurance that would pay debt if I died
40%
331
Seek professional advice (e.g., accountant, lawyer,
banker, insurance agent, etc.)
31%
254
Increase my individual life insurance coverage
30%
246
Create an estate plan
20%
161
Assume full responsibility for my loans and debts
(i.e. remove cosigners)
16%
129
Buy insurance that would pay debt if cosigner died
12%
95
None, I do not have a need
9%
72
I already have protection options in place
7%
55
Other
8%
64
Preventing a legacy of loss
Nobody likes to think about dying unexpectedly. And the results
of this survey show that many of us don’t think about it. But if
borrowers consider who – if anyone – would inherit their debt, they
might be moved to take action to financially protect the cosigners on
their loans and themselves as cosigners on others’ debts.
It can be difficult not to share the responsibility for paying loans and
credit cards. How many 18 year olds would get student loans if their
parents didn’t cosign? How many couples could afford to buy homes
if they didn’t apply for mortgages on the basis of their combined
Debt:The inheritance no one wants – November 2013 5

6. incomes? And how many middle-aged adult children are providing
their elderly parents with financial assistance?
Insurance can be the answer. Most lenders offer inexpensive coverage
for death and disability of the primary borrower. Cosigners can
purchase coverage that covers the loan if the primary borrower dies.
Simple term life insurance also is inexpensive, especially for younger
healthy individuals. Though individual term life does not directly pay
debts, the surviving cosigners can use the benefits to pay off loans
for which they have become solely responsible.
For others, especially those helping elderly or disabled family
members manage their personal finances, power of attorney or other
legal precautions protect them from becoming responsible for debt.
Comments from respondents in the Securian survey describe the
anguish they feel at the thought of saddling their survivors with debt.
The good news is that there are many options available through
financial institutions and financial advisors that help prevent an
unwanted inheritance – or legacy – of debt.
Debt:The inheritance no one wants – November 2013 6

7. 1
Amy Taub, “ In The Red: Older Americans And Credit Card Debt.” (AARP Public Policy Institute, 2013)
2
US Department of Education. “Default Rates continue to rise for federal loan students,” September 2013.
3
Meta Brown, “Student Debt Overview,” Federal Reserve Bank of New York.
About Securian Financial Group, Inc.
Since 1880, Securian Financial Group and its affiliates have provided financial security for individuals and businesses in the form of insurance,
investments and retirement plans. Now one of the nation’s largest financial services providers, it is the holding company parent of a group of
companies that include Minnesota Life Insurance Company.
Securian Financial Group, Inc.
www.securian.com
400 Robert Street North, St. Paul, MN 55101-2098
©2013 Securian Financial Group, Inc. All rights reserved.
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