Life insurance is not a sexy topic…people don’t like to talk about their future death, nor do they typically consider it a financial priority until after having kids or later on in life, if at all. In fact, according to recent studies, most individuals in the “millennials” category assume that they don’t actually need life insurance, and even if they did, they simply will not be able to qualify for or afford it. While this couldn’t be further from the truth, it is important to first address why you need life insurance to begin with. Beyond covering funeral expenses, many may not even know all the ways life insurance can be beneficial to their families, businesses, and anything else they would leave behind. Once you see all the ways you could be benefitting from a life insurance policy, it’ll make the process and the cost well worth it.
Here are 10 practical ways your family can use the benefits of life insurance:
- Cover your final expenses
This one is obvious. After your death, there will be several immediate costs for your family to cover, such as funeral and burial expenses, credit card debts, or even any remaining loans you may have. The windfall of a death benefit from a life insurance policy can be just what they need so that these costs don’t become a burden.
- Pay a mortgage
Bills don’t go away…make sure your spouse or any other remaining family can still pay the mortgage when you’re gone by buying enough life insurance coverage to at least cover payments for a few months, if not more.
- Make up for your lost income
Whether you’re in a single or dual-income household, if there are people that rely on your income to make ends meet, a life insurance policy could make sure that’s covered for several months or years after you die depending on the face value of the policy. This will help your beneficiaries still be able to cover their day to day expenses such as groceries, gas, child care, etc.
- Pay for college tuition
If you have kids who might go to college one day, a life insurance policy might be crucial to their ability to pay tuition should you die. Provide for their future now by factoring in the potential cost of continuing education (tip: calculate 10x your income, plus expected tuition costs per child. You can even use an online Life Insurance Needs Calculator to help you determine the right amount).
- Protect your small or growing business
If you own or partner in a small business, you can use your life insurance death benefit to protect those partnerships and provide for any potential losses due to your death. The funds from a death benefit can assist with buying business partner shares and providing stability and continuity for the businesses of young entrepreneurs should something happen to them.
- Provide child support or alimony if you’re divorced
A death benefit can be especially helpful for those who are divorced. Ensure your children are still cared and provided for from your side of things, and that any outstanding alimony be paid by naming the appropriate parties as beneficiaries.
- Provide continued care for an aging or special needs family member
If there is someone in your family with special care needs and relies on you to provide it, your death benefit can help ensure that care continues should something happen to you. Whether it’s equipping a spouse to take over your responsibilities or hiring a caretaker, the funds from a death benefit can help provide the care these loved ones will still need after you die.
- Estate planning
Most permanent life insurance policies have a built-in cash value feature, which can even accumulate growth based on investments and stock index performance. This extra cash value growth can be instrumental in helping clients with estate planning as they prepare to divvy up and distribute their assets.
- Leave a financial legacy
At the end of the day, a life insurance policy is a great way to leave your legacy behind for the next generation. The death benefit paid to your offspring, whether directly or via a trust, can not only equip them to begin or continue their own financial pursuits, but leaves them with an impactful token of remembrance dedicated to your own life and legacy.
- Support a charitable cause
Whether you have other beneficiaries or not, naming a charitable organization as your beneficiary is a great way to give back to the causes that matter most to you. In some cases, this may enable you to give even more than you would have by making several donations over the course of your lifetime.