Most people will often shy away from taking life insurance for fear of the unknown. It is not easy to think of your death when we all know that we are going to die and leave our family and loved ones behind one day. The truth is that dying and leaving those you love with no inheritance behind is the worst you can think of.
There are many benefits of taking life and funeral insurance when you are on active income. In this article, we mention some of the uses of life insurance benefits and reasons why you should consider taking life insurance cover for you and your family.
- Paying the final costs
When you die, your family will most likely meet some costs in organizing your burial and funeral ceremony. This will often cost a lot of money. Sometimes your family or loved one may not have all the money to give you’re the best send-off.
This is where the life insurance benefits come in – to cater for the final cost of paying your medical bills, cremations, and estate settlement costs.
- Paying your debts
You need life insurance if you are the sole breadwinner in your family. The reason is that when you are alive, you are more likely to have debts that your family will have difficulty settling when you are a dead.
Your family will be in peace with a life insurance cover because your insurance will settle all the debts you owe. Life insurance will often replace your income, which means your family can use the money the insurer pays to settle the debts you leave behind.
Your family can also use the life insurance benefits to pay for your children’s school fees and settle your credit card or any outstanding car loan.
- Provide your family an inheritance
If you live on a single source of income, it may be difficult to leave your family inheritance. Therefore, by having life insurance, you will leave your family or beneficiaries some income to meet their basic needs like shelter, food, and clothing. Your beneficiaries can use the benefits from life insurance to meet their essential expenses.
You can purchase life insurance with the sole objective of living the inheritance for your loved ones. If this is the reason for buying the life insurance, you have to name your heir or beneficiaries on the policy that your insurer provides. This is one way of ensuring that your benefits only fall on the right hands once you are dead.
- Paying state and federal estate tax
Your family members can use your life insurance benefits to pay federal and state taxes when you are dead.
On receiving an inheritance, your beneficiaries or heirs will be required to pay some state or federal tax. In this case, they can use life insurance benefits to settle the tax and other costs. You should discuss how the estate tax is likely to affect life insurance benefits with your insurer.