4 Benefits of Life Insurance
Life insurance isn’t a popular topic to discuss around the dinner table or at friendly get-togethers. But grim as it may be, it’s an important consideration as you plan for you and your family’s financial future. How much do you really know about life insurance? Many people aren’t aware of all the benefits life insurance can offer, including the following four.
Perhaps the best-known benefit of life insurance is the fact that it acts as a form of wage replacement. If the policyholder should die, benefits are paid out to his or her dependents. Beneficiaries may be spouses, children, elderly parents or disabled family members who need assisted living. Whether you’re a household wage earner or a stay-at-home spouse, life insurance is designed to compensate beneficiaries for the value you provided.
A casket, headstone and funeral service can easily exceed $10,000, an expense that would be difficult for many families to scrounge up. Life insurance benefits can be used to pay for funeral expenses so the surviving family doesn’t need to worry about financial troubles on top of such a great loss.
Payment for Debts
Many individuals and families hold debt, whether a mortgage, car loan, student loan or any other form of debt. Some of this debt can be passed down to surviving family members in the event of your death. However, life insurance benefits can be used to pay off debts so they no longer continue to affect your loved ones in your absence.
Big Family Events
Some permanent life insurance policies accrue cash value as you pay your premiums and allow you to borrow against or withdraw from the policy balance to fund a big event, such as buying a new home or sending a child to college. Following your eventual death, your beneficiaries will receive the remaining balance of the policy.