Five Uses for Life Insurance Benefits

It may be difficult to think about, but it’s never too early to be prepared. Life insurance can be an important part of your financial strategy, helping to ensure a more secure financial safety net for your loved ones when you’re gone.

Uses for life insurance benefits may include the following.

1. Paying final costs. Life insurance policy benefits can be used to pay final expenses, including funeral or cremation costs, medical bills not covered by health insurance, estate administration fees, or other unpaid obligations.
2. Paying off debt or replacing income. Life insurance benefits can help replace your income if you pass away. Your beneficiaries can use the money to help cover essential expenses, such as paying off a mortgage or securing college educations for your children.
3. Securing an inheritance. The Insurance Information Institute (III) suggests buying a policy with a named heir as a beneficiary in order to secure an inheritance for your loved ones.
4. Paying federal or state estate taxes. Your heirs may face an estate tax upon receiving their inheritance, depending upon the state of residence and the amount. The III suggests that life insurance benefits may be used to partially or completely offset this cost for your heirs.
5. Making charitable contributions. Life insurance policies can be created with your favorite charity as a named beneficiary. The policy can help ensure your philanthropic goals are met after you die.

Discussing your financial goals with a life insurance agent can help you clarify the right type of policy and benefit to meet your needs.

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