A life insurance policy ensures that the financial concerns of your dependents are taken care of in case of your untimely demise. It offers a way to provide your family with a financial cushion to meet their expenses. Some of the ways to use life insurance benefits are:
Paying for End-Of-Life Expenses
Life insurance policy benefits can be used to pay for funeral expenses and cremation costs upon your passing away. It can also be used by your dependents to pay off any medical expenses that may not be covered by your health insurance plan.
Paying Off Loans
Life insurance benefits can, to a certain extent, be used as income after you pass away. Your beneficiaries can use the amount for essential expenses like paying off a mortgage or to fund your children’s education. It can also be used to settle your credit card bills or an outstanding car loan.
Life insurance benefits can be left as an inheritance to your family. If you would like a specific person in your family to receive the benefits, you can name that person as the beneficiary. This will ensure that your life insurance benefit goes to the person you intended to receive it. Keep in mind to review your choice of beneficiary from time to time – for instance, once you have a child, you may want to update their name in your list of beneficiaries as well.
Paying Federal or State Estate Taxes
Depending on the state you live in, your heirs may have to pay estate tax on the inheritance they receive. The life insurance benefits can be used by your beneficiary to pay off this expense.
Charity: The Insurance Information Institute (III) states charitable organizations can be named the beneficiary of your life insurance plan. If that is what your wish is, make sure to add the charity of your choice as a full or partial beneficiary when buying your plan. This will ensure that your “charitable responsibilities” are taken care of upon your demise.
Although passing away is a sensitive but inevitable reality, life insurance benefits can help provide a relatively secure financial future for your loved ones if something untimely were to happen to you. We recommend you contact an experienced life insurance agent to help you get a clear understanding of the different types of life insurance policies available, and then choose the policy that best suits you and your family’s requirements.