What can I use my life insurance for?

Life insurance policies can be used for a variety of reasons.

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When it comes to protecting your dependents, life insurance is important. This is a smart way to ensure that your loved ones will be taken care of in the event of your death.

Yes, there are different considerations when trying to determine How Much Life Insurance Do You Really Need?. and What type of life insurance? you choose (Full or duration) is specific to your personal financial situation.

Once the amount and type of life insurance is decided you can start paying your premiums knowing that your loved ones will be safe and secure. But how safe and secure will they actually be? How do life insurance payouts work and what can the money be used for? The answers to these questions will help you decide whether the type of policy you have — or want to upgrade — is adequate.

If you don’t have life insurance or want to boost how much you already have, now is a good time to start. You can get started with a price estimate today.

Regardless of where you fall in terms of life insurance protection, it’s helpful to understand what the final policy payout can be used for.

What can you use life insurance for?

Life insurance policies can be used for a variety of reasons.

Many people will use a portion of a life insurance policy to cover funeral expenses. Those with a spouse or children usually buy a policy so that their loved ones can easily cover service costs after they are gone.

You can also put the proceeds into a trust so that the beneficiaries don’t have access to the entire amount when you pass. This can be useful if you have young children and want to make sure they are responsible with money.

Sometimes people purchase life insurance to provide an inheritance for non-dependents. For example, if you are single with no children, you can purchase life insurance with your nieces and nephews as beneficiaries. If you have pets, you can also purchase a policy so that your animal care companion will have the funds to do so.

Some people will purchase specific life insurance policies, such as universal life insurance, to use as an investment. Unfortunately, these policies often have high fees and usually don’t match the stock market. You are often better off investing in a traditional retirement account such as a 401(k) or IRA. Generally, only high net-worth individuals can benefit from purchasing one of these policies.

A note: these examples are typically used for life insurance, while those that pay beneficiaries can be used however the recipient wishes. There are no specific limits or requirements to be met. The cash received can be used as one sees fit.

If you don’t have life insurance, or, realizing what it might cover, want to boost what you currently have, there are options to pursue. Getting a life insurance quote is a great first step.

When pursuing a new policy, however, it is also beneficial to have a clear understanding of comprehensive life insurance policies. This will help ensure you make the right decision when shopping for insurance.

What is life insurance?

Life insurance is a means of protecting your family in the event that your main income is passed away in the years to come. A suitable life insurance policy should pay out enough so that your family does not struggle financially after your death.

Only those who provide financial support to other people need to buy life insurance. For example, if you are single with no dependents, you probably don’t need to purchase a policy. However, if you are married and have two children, you will probably need an adequate policy.

Life insurance policyholders pay a monthly premium. If they die while the policy is in effect, the beneficiaries will receive the payout, which is tax-free.

There are two main types of life insurance: term and whole. As it sounds, term life insurance is only sold for a certain period of time, usually 10 to 30 years. Whole life insurance is designed to cover you for the duration of your life.

Term life premiums are generally much less expensive than whole life premiums because you are less likely to use the policy.

Most consumers don’t need a whole life policy because they don’t need coverage for their entire lives. For example, if you die while you are retired, your beneficiaries will receive any remaining investments and savings. And since you’re not providing income through your job, you don’t have to replace that income stream when you pass.

Some employers offer free or discounted life insurance coverage as a workplace benefit, but the total amount can range widely. If you leave or leave the company, the policy will be forfeited and you will no longer have coverage. It is often wise to keep your own life insurance policy separate from your employer’s.

Considering increasing your current life insurance coverage? Or want to start fresh with a new policy? Act now and get a price estimate today.

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