who is responsible for outstanding credit card debt once the card holder has passed away??

I am sorry for your loss. Generally speaking your dad's estate is liable for the debts. If there is no estate, since it's only life insurance, then arguably a creditor could open an estate and go after the life insurance money. This is not likely but it is theoretically possible.  Some people just pay the credit cards and other debts to avoid this possibility and/or because they believe their dad would have wanted his debts paid. In any event I believe your sister is technically correct though maybe not correct from a practical standpoint.  Good luck. -John