Life insurance securities provide finances for the named beneficiaries upon the policyholder's death. Most often, life insurance is viewed as a way to provide for your family should you pass away, but that is not it’s only use. Life insurance securities can serve many purposes, and almost everyone should have them. Here’s a look at some of the ways people at different stages can use life insurance to cover their end-of-life financial obligations.
Providing for Your Family
As mentioned, life insurance gives parents a way to provide for their families, should they pass away unexpectedly. Both whole and term life can be used for this purpose, but term policies are specifically designed for this. They provide coverage for a set number of years, which is presumably the time during which people are financially dependent on you.
Insurance policies that are used to provide for family members after an unexpected death are typically large policies, because they need to provide financial support for several, perhaps many, years. It’s not uncommon for these policies to be several times larger than your annual income, and they can easily reach into the six-figure range.
Paying Off Debt
Life Insurance can also be used to pay off outstanding debt. Adults who have outstanding student loans, a mortgage, credit card debt, business loans or other unsecured debt may want to pay off their loans completely. They may want to do this to leave behind a good name, or they might want to make sure their heirs inherit their assets. A lump-sum from a life insurance company can be used to pay off any outstanding debt that the policyholder wasn’t able to pay back during their lifetime.
If you’re using life insurance to pay off debt, then the policy should be for the amount of your debt.
Paying for Funeral Arrangements
Finally, life insurance can be used to pay for life insurance. Even elderly individuals who don’t have debt sometimes keep a small life insurance policy to cover their funeral costs. This way, the people left behind don’t need to worry about covering this expense in the midst of their grief.
Everyone Needs Life Insurance
Everyone needs life insurance, whether they have a family to care for, debt to pay off or just need to cover their funeral and burial expenses. If you don’t have a policy, contact one of our independent agents who can compare policies from different insurers to find an affordable one that meets your specific needs.