Financial hardship can come from any direction, but after the death of a family member the obligations and lack of cash flow can add up fast. While there are numerous uses for life insurance, the following five are the ones that might concern you or your loved ones the most.
Pay for final expenses. Death isn’t cheap these days. Aside from cremation or funeral expenses, your loved ones could face enormous medical bills, estate administration fees, and other debts related to your passing.
Replacing income. If you’re the primary breadwinner in your home, replacing your income will become vital to your family’s financial solvency. But even the non-breadwinner needs life insurance, too. Consider other expenses you could face if your partner passes away.
Paying taxes. If you leave a large estate to your heirs, they could owe a considerable amount of federal or state income taxes on it. If the estate is comprised largely of non-cash assets (like real estate) they could be forced to sell it just to pay the tax bill. A life insurance policy can provide those funds instead.
Even if your estate isn’t large enough to be subject to estate taxes, your heirs will have to pay your income taxes one last time.
Savings. Life insurance that builds cash value can come in very handy if your family has a financial hardship or has unexpected financial needs. There are even ways to access that cash value without increasing your tax liability.
Inheritance. Do you have certain goals you hope to accomplish for your family during your lifetime? Perhaps you want to ensure that your children or grandchildren can attend college, or you want to provide each of them with a down payment for their first home. A life insurance policy can help to ensure that your wishes can still be realized, even if something happens to you.
Leave a legacy. If philanthropy is important to you, you can name a favorite charity as beneficiary on a life insurance policy.
These are just some of the reasons that life insurance is an important part of your overall financial portfolio. For more information on how life insurance can be used to provide for your heirs, give us a call and we will discuss your options.