The many uses of life insurance: Part 1 – The Basics.
By: Alan J. Mendlowitz, RICP, CRES
Life is unpredictable, and there is no way to know what will happen in the future. As a responsible individual, it is important to plan ahead and protect your loved ones in case of any unfortunate circumstances. One of the most important ways to provide financial security for your family is by investing in life insurance. In this blog, we will discuss how life insurance can provide financial protection, pay off debts, cover funeral expenses, and provide for your children.
1. Providing Financial Protection
The most important function of life insurance is to provide financial protection to your loved ones in case of your untimely death. Life insurance can help replace your income and provide financial stability to your family. The beneficiaries of the policy receive a tax free lump sum payment, which can be used to cover expenses such as mortgage payments, living expenses, and educational costs.
Mortgage payments can be a significant expense, and if you were the primary earner in your family, your family may struggle to make those payments without your income. Life insurance can provide the necessary funds to pay off the mortgage and ensure that your family can remain in their home.
Living expenses such as utilities, groceries, and other bills can also add up quickly. Life insurance can help cover these expenses and provide financial stability for your family.
Make sure you have enough coverage to pay for all these things and for as long as they will need to be paid!
2. Paying Off Debts
If you have debts such as a mortgage, credit card balances or car loans, life insurance can help pay them off so that your loved ones do not have to take on the burden. In the event of your death, your family will already be going through a difficult time. The last thing they need is the added stress of debt payments. Life insurance can help alleviate that stress and ensure that your family is not burdened with your debts.
3. Covering Funeral Expenses
Funeral expenses can be a significant expense for your loved ones. The average cost of a funeral in the United States is around $7,000-$10,000, and that does not include other expenses such as cemetery plots, headstones, and flowers. Life insurance can help cover these expenses and ensure that your loved ones can give you the funeral that you deserve.
4. Providing for Children
If you have children, life insurance can help provide for their needs, including education and living expenses. Children are expensive to raise, and without your income, your family may struggle to provide for them. Life insurance can help provide the necessary funds to ensure that your children are taken care of, even after your passing. This can include providing funds for their education, as well as living expenses such as food, clothing, and housing.
In conclusion, life insurance is an important investment for anyone who wants to protect their loved ones in case of an unexpected death. It can provide financial protection, pay off debts, cover funeral expenses, and provide for your children. When choosing a life insurance policy, it is important to consider your family's needs and choose a policy that meets those needs. Life is unpredictable, but with a life insurance policy, you can ensure that your family is financially secure, no matter what the future holds.
You can reach out to me with questions anytime!
Some sources and good reads:
1. Providing Financial Protection:
• "Why Life Insurance Is Important for Your Family's Financial Future," Forbes, February 17, 2021, https://www.forbes.com/advisor/life-insurance/importance-of-life-insurance/?sh=1305cf122a00
2. Paying Off Debts:
• "How Life Insurance Can Help Pay Off Debt," Investopedia, March 26, 2021, https://www.investopedia.com/articles/personal-finance/101514/how-life-insurance-can-help-pay-debt.asp
3. Covering Funeral Expenses:
• "The Average Cost of a Funeral," SmartAsset, October 13, 2021, https://smartasset.com/life-insurance/life-insurance-and-funeral-costs
4. Providing for Children:
• "Why Parents Need Life Insurance," Policygenius, August 23, 2021, https://www.policygenius.com/life-insurance/why-parents-need-life-insurance/