5 Ways to Use Life Insurance Benefits

iQuanti: Life insurance can help cover your financial expenses both during your life and after you're gone, depending on the type of policy you purchase. The death benefit provides your beneficiaries financial security for their future.  

Regardless of the type of policy you have, there are a number of ways to use life insurance benefits. Read on to learn about five of the most common ways.  

1. Covering final expenses 

The average cost of a funeral can range from $7,000 to $12,000 or more. And, depending on your health insurance, outstanding medical bills and other costs can add up quickly.  

After you're gone, your life insurance benefits can be used to pay any final expenses, such as funeral or cremation costs, medical bills not covered by health insurance, or other outstanding expenses. By using your life insurance death benefit, your loved ones don't have to worry about whether or not they can meet those financial needs or obligations. 

2. Eliminating debt 

If you have outstanding debts when you pass away, such as private student loans, a mortgage, auto loans, credit bills or others, your life insurance death benefit can be used to eliminate those debts so your loved ones don't have to pay them out of their pocket. This provides additional financial protection to your family, and can ensure they don't have to deal with debt collectors or other challenges that come with debt. 

3. Providing an inheritance 

You may choose to purchase a life insurance policy with the goal of leaving something behind for your family and loved ones. You can name one or several people, called beneficiaries, to receive your death benefit as an inheritance. This can help provide financial security to those you leave behind and your beneficiaries can use that inheritance for anything they need, such as education, purchasing a car or home, paying off debt, or other needs or wants.  

4. Contributing to charity 

Instead of naming a loved one as a beneficiary to your policy, you could name your favorite charity. This provides some or all of your death benefit to the charity of your choice, helping to ensure your philanthropic goals are met.  

5. Paying off taxes 

Depending on the state you live in, your beneficiaries may have to pay federal or state estate taxes if they receive an inheritance. You can designate a portion of your life insurance benefit to partially or completely pay those costs, leaving them with more of the value of your inheritance. 

Source: iQuanti, Inc.

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Categories: Banking, Finance, Insurance

Tags: expenses, financial services, insurance, life insurance