Life Insurance Benefits
Life insurance can be an important part of your financial strategy. Because a life insurance policy can help you ensure that your loved one has a secure financial future after you die.
Life insurance can not only help cover your final expenses - it can provide a financial security net for your family by replacing your income or serving as a legacy to a loved one. Read on to know some of the ways in which life insurance benefits can be availed.
Here are some common uses of life insurance benefits:
PAYING OFF DEBT OR REPLACING INCOME
Life insurance benefits can help replace your income if you die. This means that your beneficiaries can use the money to cover necessary expenses, such as providing a mortgage or college tuition for your children. It can also be used to repay a loan, such as a credit card bill or an outstanding car loan.
PAYING FINAL COSTS
Life insurance policy benefits can be used to pay for the final costs after your death. These may include funeral or cremation costs, medical bills not covered by health insurance, estate settlement costs and other unpaid obligations.
Some people purchase life insurance with the intention of leaving a death benefit to their loved ones. If you want to inherit your benefits to a particular person, the Insurance Information Institute (III) recommends naming your chosen heir as the beneficiary in your policy. This will ensure that your life insurance benefits fall into the hands of the person you want to get.
Life insurance policies can be made with your favorite charity as a designated beneficiary, says III. This can help ensure that your public interest goals are met after you die and that those benefits are provided to the charity of your choice.
Life insurance can be a sensitive issue, but in the event of unforeseen circumstances it can help provide a more secure financial future for your family. Contacting an insurance agent can help you better understand the types of life insurance and determine which type of policy suits you and your family's needs.
PAYING FEDERAL OR STATE ESTATE TAXES
Depending on state law, your heirs may have to pay an estate tax after receiving the inheritance. III states that life insurance benefits can be used to partially or completely offset these costs. It is a good idea to consult with your insurance provider or financial professional to understand how estate taxes can affect your beneficiaries.