Life insurance is an important way to relieve the financial burden on your loved ones when you pass away. If you purchase coverage, your beneficiary will receive a financial payment depending on the terms of your policy, which is known as a "death benefit" and can be used in several different ways. If you're considering buying coverage but are unsure how it can be useful, here are some common uses of life insurance payments.
How Can Life Insurance Be Used?
1. Provide for Dependents
If you are your family's primary breadwinner, their financial circumstances will likely change considerably when you are gone. Their income will drop significantly, while they may also face more expenses, such as childcare or housekeeping costs. Because of the sudden change in their financial situation, they will likely have trouble maintaining their current standard of living. To protect your family from this financial stress in addition to the emotional toll of a loss, you can purchase a life insurance policy that will cover their expenses while they adjust to a new life.
2. Pay Off Debt
Often, a policyholder will purchase insurance that will cover their mortgage debt so that their spouse and children won't have to struggle to stay in the family home. For most people, affordable term life policies are available that expire in 10, 20, or 30 years to ensure that the loan never falls on their loved ones. Life insurance payments can also be applied to other debts, including auto or credit card loans, to avoid transferring the financial burden.
3. Cover Final Expenses
The average cost of a funeral service continues to rise and can quickly total thousands of dollars. If you haven't prepared for this expense, the burden will fall on your loved ones after you're gone, which can add to the stress of such a challenging time. Purchasing life insurance will protect your family from the financial burden, as they will receive a benefit to help them cover the cost of a service, embalming, burial, casket, headstone, and other final expenses.
4. Leave a Bequest
If you've already covered your final expenses and no longer have debt or dependents, you may think you don't need life insurance. However, you may still want a policy to secure your legacy. Many people purchase coverage so they can leave a bequest to their grandchildren, a caregiver, a beloved friend, or even a charitable organization. When you purchase a policy, you can decide who to designate as the beneficiary to ensure the payment goes where you want.
If you're looking for life insurance to simplify your loved ones' financial circumstances after you're gone, contact Kelley Agency in Lorain, OH. They are a locally-owned, independent insurance agency serving Lorain County and the surrounding areas. They offer top-quality insurance products and advice to help you select the right policy at the right price. Visit their website to learn more about their insurance options or call (440) 282-8898 to request a free quote.