Did you know that life insurance is not for those who die? It’s for those who live. If you die and have life insurance in place, the people who you love and care about (your beneficiaries) will receive a sum of money. They can use this money for anything, however, it’s main purpose is usually to help make up for the loss of your income. The money that they receive is generally free of federal income tax and is generally used to address the following:
- Daily Living Expenses: help maintain your family’s lifestyle by replacing your current income. The proceeds can help make sure there is food in the refrigerator, the utility bills are covered, the car note is made on time, etc.
- Home: help protect your family’s home by enabling them to pay off the mortgage. This is important because it can help them stay where they are comfortable and in a place that is filled with memories.
- Education: help safeguard your child’s future by keeping the college fund intact. This will ensure that there will be money for their education no matter what
- Final expenses: help to provide funds to pay estate taxes and other expenses, such as funeral cost, outstanding medical bills, etc. This will prevent leaving a financial burden while your family grieves.
- Retirement: help ensure a solid retirement for your spouse or partner since you’re no longer there.
While individual needs can be covered by life insurance, it also comes in handy for a business owner. Having life insurance can aid with business continuation. Life insurance can help keep the business in the family according to your intentions by helping your family buy out or maintain the business.
There are many layers to the amazing product called life insurance, and now, you know the “why” behind it.