What Does Life Insurance Help Protect?
While the benefits of life insurance may not be immediately apparent, having a policy can be a great way to help protect your loved ones after you pass away. But what does “protecting” really mean? We’ve got a few examples of ways life insurance can protect your loved ones’ financial stability after you’ve passed away to help you understand the main benefit of life insurance.
What Life Insurance Can Help You Protect
Funeral costs. Funerals can be expensive, and the last thing anyone wants is to be worrying about money while they’re grieving. While it may sound simple enough to purchase a coffin or cremation service, consider the cost of the burial plot, headstone and the cost of renting the funeral home for the wake. According to the Huffington Post, the average funeral costs around $11,000, so having extra money to cover those expenses can relieve loved ones of a huge financial weight.
Lost income. Life insurance can be a big help if the loss of a loved one also results in the loss of income for your family. Using this money as income replacement can help protect financial stability for your beneficiaries. In fact, when you consider purchasing life insurance, you should take into account how much you earn and how many years of income replacement may be necessary should you pass away.
Your mortgage. Along with lost income comes the sudden need to cover bills without a second earner in the household. If you intend to pass on your home to your loved ones but haven’t paid off the mortgage, a life insurance policy could help them pay for it or cover the costs of selling it after you pass away.
Higher education. If you, your partner or your dependents are currently in school or saving for school, life insurance can help protect those savings or help cover the costs of continuing education. It can even be used to help pay off student loans.
Outstanding debts. If you were to pass away and leave behind debts that are inherited by your next of kin, those debts will need paying. Usually, the only kinds of debt a person can inherit are any they’ve cosigned for, like loans or credit cards, although some states may require them to pay their parents’ medical bills as part of legally required “filial responsibility”. Before passing the debt on, the deceased’s estate is typically liquidated to pay for debt — but that may not be enough to pay it all off. Life insurance can help cover that expense and help prevent loved ones from being burdened by extra debt.
Because your beneficiary can generally use the money they receive from your life insurance policy for any reason, it can be an incredibly helpful windfall that will help financially provide for your loved ones after you’ve passed away. If you’re considering purchasing a life insurance policy, connect with your American Family Insurance agent to get the process started. They can help you understand what the right amount of coverage is for your needs.