Insurance -life can not only help you cover your final expenses, but it can also provide your family with a financial safety net by helping replace your income or by serving as an inheritance for a loved one. Read on to learn more about some of the ways in which insurance benefits -life can be used:
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Here are some common uses of insurance benefits -life:
PAY THE LAST COSTS
Insurance benefits -life can be used to help pay for final expenses after your death. This may include funeral or cremation costs, medical bills not covered by health insurance, estate settlement fees and other unpaid obligations.
REFUND A DEBT OR REPLACE AN INCOME
Insurance benefits -life can help you replace your income if you die. This means that your beneficiaries could use the money to cover essential expenses, such as paying a mortgage or paying for your children’s school fees. It can also be used to pay off debts, such as credit card bills or an outstanding car loan.
HERITAGE
Some people take out life insurance with the intention of leaving the capital -death as an inheritance to their loved ones. If you want a particular person to receive your inheritance benefits, the Insurance Information Institute (III) suggests naming the chosen heir as the beneficiary of your policy. This will ensure that your life insurance benefits fall into the hands of the person from whom you intended to receive them.
PAY FEDERAL OR STATE FUNCTIONAL TAXES
Depending on the state’s laws, your heirs may need to pay an estate tax upon receiving an inheritance. The III states that life insurance benefits may be used to partially or fully offset this cost. It would be a good idea to consult with your insurance provider or financial professional to understand how estate taxes can affect your beneficiaries.
BENEFIT GIFTS
Life insurance policies can also be created with your preferred charity as a designated beneficiary under III. This can help ensure that your philanthropic goals are met after your death and that the benefits go to the charity of your choice.
Life insurance can be a sensitive subject, but it can help ensure a safer financial future for your family in the event of unforeseen events. 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.
Updated: October 2019
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