Disclosure: This post was submitted on behalf of Penny Minding Mom.
Life insurance is one of those financial tools we all know about, yet as many as 40% of Americans don’t have any form of life insurance. If you have outstanding debt or a family to take care of, you need to have a form of life insurance.
So how does life insurance help your family? If you pass away, it provides your family with financial security. This may sound cold, but the reality is that you need to make sure your family is taken care of should the worst happen.
Keep reading to learn about four ways life insurance can help your family.
1. Pay Bills
The death of a loved one can leave bills left unpaid. Life insurance coverage can provide the financial support needed to continue to pay bills. This means that your family’s quality of life can remain constant.
Similar to current bills, the policy proceeds can go towards paying outstanding debts. These could be outstanding loans, a mortgage, or any other agreement that you’re legally required to pay.
This applies to both the deceased and their family’s debts. By using a life insurance policy to pay off the deceased debts, it can protect the estate from these creditors. That way, you can be sure that your estate goes to who you intend.
The proceeds can also go towards your family’s outstanding debts. Trying to process grief and feel the pressure to pay can be overwhelming. Having the ability to pay off debts can provide relief to your family.
2. Provide a Retirement Account
If you’re married, then your retirement plan is probably combined or at least coordinated with your spouse. If you or your spouse pass away, this is a lifetime of earnings that will no longer happen.
A life insurance policy can replace this loss of retirement contributions. A life insurance policy can also ensure that maximum employer contributions are taken advantage of. This ensures the greatest amount of retirement savings is achieved.
3. A Lifetime Income Stream
Instead of agreeing to one large single payout, you can have the life insurance distribution spread out over several years. The money will go into an annuity and then make periodic payments to your family.
This will take the pressure off since managing a large sum of money can be stressful and overwhelming. Especially for someone who has never had to manage such an amount.
It can also provide some predictable stability to their lives with a guaranteed check.
4. Paid-Up Additions Rider
Once you have your whole life insurance policy in place, you can purchase a paid-up additions rider. Paid-up additions let you increase the value of the living benefit by increasing your policy’s overall cash value.
This additional coverage uses your policy’s dividends instead of premiums. Then the additions earn dividends. This value continues to compound and will grow indefinitely.
How Does Life Insurance Help Your Family? Financial Security
So how does life insurance help your family? It provides financial security and stability.
If you have a family, then you should consider having a life insurance policy. That way, you can have peace of mind that they’ll be taken care of should the worst happen.
Check out our family and home section for more helpful articles like this one.