Benefits of Life Insurance

While it is never fun to think about and plan for the end of our life, it is a reality that we cannot escape. Life insurance is something that can make a huge difference to you and your family should something happen to you. For a small investment, you can ensure that your family and loved ones will have one less thing to worry about. There are some other benefits to life insurance that you should be aware of as well.

What Does Life Insurance Cover?

Life insurance is meant to provide financial support to your loved ones to cover a variety of essential expenses after your passing. While coverage depends on your policy, most plans are designed to ease both immediate and long-term financial burdens. 

Income Replacement

Helps your family maintain their lifestyle by covering everyday expenses like bills, groceries, and utilities. This aspect is very beneficial if your household relies on two incomes to pay expenses.

Debt and Mortgage Payments

Can be used to pay off outstanding debts, including your mortgage, loans, and credit cards. 

Final Expenses

Covers funeral costs, medical bills, and other end-of-life expenses.

Future Needs

May help fund long-term goals, such as college tuition or childcare. 

Business Support

For business owners, it can help cover current and outstanding expenses or ensure a smooth transition. 

Life insurance gives your family the financial flexibility and stability they need during a difficult time. 

Final Expenses and Debt:

If you die, would your family be able to survive financially? With most households being dependent on two incomes, this is not likely. A big reason to purchase life insurance is to pay for your final expenses, like a funeral or wake, and your final resting place. The average funeral these days can cost well over $20,000 and if something happens to you, you won’t want your family to have to come up with the money to pay for that while they are trying to grieve. Also, if you purchase a larger face amount, your family can use the benefits to pay off debt like your mortgage, car payment, or even student loans. Best of all, the benefit is tax-free.

Cash Value:

Depending on the type of life insurance policy you purchase, it could accrue cash value. That means you can take cash out, or borrow against the policy if you need to. In this way, it can be seen as an investment. Be sure to discuss the ins and outs of this benefit to fully understand how it works, especially with taxes and any loan repayment. 

Riders:

There are many riders that you can add to most life insurance policies that could prove to be very beneficial to policyholders. A child rider can be added to have a small face amount for your children. A long-term care rider will allow you to use your death benefit to pay for long-term care if that is what you need it for. An accidental death rider will pay an additional death benefit if you die in an accident.

Life Insurance FAQs

  • The right amount varies per person depending on their specific situation. At Rumbaugh Insurance, we will sit down with you and go through options that best suit you and your family.

  • Term life insurance lets you select a period of time during which you will be covered. Whole life insurance provides lifelong coverage until you pass and may build cash value over time. The best option depends on your budget and long-term needs. 

  • The sooner, the better. Life insurance is generally more affordable at a younger age, and you can lock in lower rates.

  • In most cases, life insurance death benefits are not subject to income tax. However, there may be exceptions depending on your policy and estate. Our team will go over your specific policy details so you and your family are aware.  

  • Yes, many people choose to have multiple policies to cover different needs, such as a term policy for income replacement and another for long-term financial planning. 

  • Most policies include a small grace period that allows you to make a late payment without losing coverage. If payments are missed beyond that period, your policy could lapse. 

  • Life insurance can still be beneficial even if you are single and have no dependents. It can help cover debts or provide final care support to family members or beneficiaries you choose.

As you can see, life insurance offers many benefits in addition to paying for funeral expenses. If you or your family members do not have life insurance currently, contact Rumbaugh Insurance today to discuss your options.