It’s important to know what life insurance is– and how it works! Life insurance is about financial protection. It works like this: you pay a premium to an insurance company and in exchange, the insurance company would pay a lump sum (tax-free) to your beneficiary, if you die while the policy is active. Insurance policies are customizable to fit your family’s needs, and you can choose the type of policy, how long you want it to last, and the amount which would be paid out.
Certain policies are created to help beneficiaries if a family member passes. These are referred to as “final expenses”. Funds get passed along to them to help cover funeral costs or just be distributed as a gift. Critical or terminal illnesses are other events that could trigger a payout being distributed.
Your beneficiaries can spend your policy’s death benefit on expenses such as; monthly bills, groceries or other household essentials, outstanding debts (including a mortgage, credit card debt, private student loans, or auto loans), childcare: replacing care provided by a spouse, end-of-life expenses: such as funeral expenses or end-of-life medical care, or college costs to fund continuing education for your spouse, or tuition for your children.
The first step is to reach out to an insurance agent to have them assist you with finding the policy that is right for you!