Did you know that life insurance is not for those who die? It’s for those who live. Suppose you die and have life insurance in place. In that case, the people you love and care about (your beneficiaries) will receive a sum of money. They can use this money for anything; however, its primary purpose is to help make up for the loss of your income. The money that they receive is generally free of federal income tax and is usually 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, utility bills covered, the car loan payment is on time, etc.
- Home: help protect your family’s home by enabling them to pay off the mortgage. It’s crucial because it can help them stay where they are comfortable and in a place that’s 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 provide funds to pay estate taxes and other expenses, such as funeral costs, 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. There are many layers to the fantastic product called life insurance, and now, you know the “why” behind it.