What Can Life Insurance Pay For?
Life insurance isn’t just for paying your final expenses. It’s a tax-free benefit that your beneficiaries can use for a variety of things, such as:
Debt
Unless you’ve won the lottery (congratulations!) or inherited a windfall, chances are you have some debt. In fact, the average U.S. household carries a debt of $137,063, according to USA Today.
Mortgages, student loans, credit card bills, and financed vehicles are all major sources of debt — and that debt doesn’t always disappear after you’ve passed on. Upon your passing, your debt now becomes the responsibility of your estate, so any assets you’ve left behind for your heirs may be at risk to pay off your debt. Worse, if you have cosigners on any of your loans, they’re on the hook for your debt.
And if someone has cosigned one of your loans, guess what? That debt becomes their problem (uh-oh).
Lost Income
Whether your household is dependent on one income or two, a life insurance policy can replace lost income for as long as you’d like.
Even if you have a group life policy through work, it’s often not enough coverage, and buying additional coverage is more expensive than buying your own personal policy. Plus, if you only have life insurance through your employer, you run the risk of a coverage lapse if you leave your job.
Childcare
If you’re your family’s breadwinner, your loved ones will feel the financial impact of losing your income. But you need life insurance even if you’re a stay-at-home mom or dad.
Your children need to be taken care of while the surviving parent continues to work to pay the bills. Childcare, housekeeping, chauffeuring, cooking… all of the tasks that a parent once took care of now become additional expenses.
Financial Gift
Life insurance can be as simple as a gift. Even single people, with no dependents or significant others, have valid reasons for purchasing a policy. It’s an effective way to take care of ailing parents, a beloved sibling, or ease the burden imposed on a business partner after your death.
Final Expenses
It’s exactly what it sounds like. Think of any potential medical bills and funeral arrangements, which can cost anywhere from $8,000 to $10,000. Even a $50,000 policy can go a long way to help your loved ones cover these final costs.
Unless your savings can sustain your family’s lifestyle when you’re no longer around to continue contributing, you need life insurance. Any level of coverage will provide your family with a buffer period to mourn and figure out future plans. In a way, life insurance is one final reminder to your family of how much their well-being means to you.
From our friends at Bestow Life Insurance
