Life insurance assures you that your family will be financially stable after you are gone. It is a financial strategy to cater to your family’s needs after you pass away. Although the most common information about life insurance is about covering funeral expenses after your demise, there are other key benefits of life insurance plans that are not known by many people. Read further to learn more about how you can maximize the benefits offered by life insurance plans.
Below are the key benefits of life insurance plans:
1. Income Replacement and Settlement of Debts
Life insurance benefits can be used to replace your income when you pass away. The money could be used to pay off expenses, such as your mortgage and the college tuition for your children. Additionally, other debts such as car loans and credit card bills can also be settled from your life insurance benefits. Your family will not be put under financial pressure to pay off debts and cover mandatory expenses if you had a life insurance policy that covers these items.
Another key benefit of life insurance is that it can be left as an inheritance to loved ones. Instead of leaving assets, you can invest in a life insurance plan and choose a specific person to receive the benefits as an inheritance. Given this, you must name the chosen heir or heirs as the beneficiary on your policy. This will ensure that the benefits go to the right person or people.
3. Caring for Aging Parents
If you have aging parents who depend on you for their day-to-day expenses or personal support, the best way to secure their financial independence, in case you pass away before them, is to buy a life insurance plan and name them as the beneficiaries. This will ensure that your parents have a lifeline to cater to their needs if you pass away.
4. Tax Payment
After receiving an inheritance, some regions have tax laws that mandate the heirs need to pay an estate tax after receiving the life insurance benefits. Because of this, the taxes can be paid from the insurance benefits. However, you should contact your financial advisor and insurance provider to verify and know what impact estate taxes may have on your beneficiaries.
5. Final Expenses Payment
When you pass away, all the final expenses will be paid from your life insurance benefits. Hospital bills, funeral, and burial or cremation costs will be taken care of from the life insurance benefits.
The above are some of the key benefits of having life insurance, however, not all policies offer the same coverage and options. If you want your family or loved ones to be free from financial burdens after passing away, speak with a life insurance professional to better understand your options.