What Are the Benefits of Life Insurance? | 5 Ways It Can Help You

Life insurance is a contract between you and an insurance company that pays a lump sum of money to your beneficiaries when you die. But what are the benefits of life insurance, and why should you consider getting a policy? Here are five ways life insurance can help you and your loved ones.

1. Life Insurance Provides Financial Security for Your Family

One of the main benefits of life insurance is that it can replace your income and cover your expenses after your death. This can help your family maintain their lifestyle, pay off debts, fund education, and achieve other financial goals.

Imagine what would happen to your spouse, children, or parents if you suddenly passed away. How would they cope with the loss of your income? How would they pay for the mortgage, the car loan, or the medical bills? How would they afford to send your kids to college or plan for retirement?

Without life insurance, your family could face serious financial hardship and emotional stress. They might have to sell their home, take on more debt, or lower their living standards. They might have to give up on their dreams or aspirations.

But with life insurance, you can protect your family from these scenarios. You can ensure that they have enough money to cover their essential needs and pursue their goals. You can provide them with a financial safety net and a cushion against unexpected events.

Life insurance payouts are tax-free, so your beneficiaries can use the money as they wish. They can invest it, save it, or spend it according to their needs and preferences. They can also use it to honor your memory or legacy.

2. Life Insurance Can Cover Your Final Expenses

Another benefit of life insurance is that it can pay for your funeral, burial, or cremation costs, which can be thousands of dollars.

According to the National Funeral Directors Association, the national median cost for a funeral, viewing and burial was $7,848 as of 2021. The cost for a funeral, viewing and cremation was $5,873. These figures do not include other expenses such as flowers, obituaries, or cemetery fees.

Having a life insurance policy can relieve your family from the financial burden and stress of arranging your final farewell. They won’t have to dip into their savings or use credit to pay for your end-of-life costs. They won’t have to worry about finding the best deal or negotiating with funeral providers.

Some life insurance policies offer a final expense rider, which allows you to access a portion of your death benefit to pay for your end-of-life costs. This way, you can plan ahead and choose how you want to be remembered. You can also spare your family from making difficult decisions during a time of grief.

3. Life Insurance Can Offer Benefits During Your Lifetime

Depending on the type of life insurance you choose, you may be able to access some benefits while you are still alive.

For example, some permanent life insurance policies have a cash value component, which is a savings account that grows over time. You can borrow or withdraw money from your cash value for any purpose, such as paying for emergencies, investing, or supplementing your retirement income.

The cash value accumulates on a tax-deferred basis, meaning you don’t have to pay taxes on the growth until you withdraw it. You also don’t have to go through a credit check or repay the loan as long as you keep paying your premiums. However, keep in mind that borrowing or withdrawing from your cash value will reduce your death benefit and may incur fees or interest charges.

Another example is an accelerated death benefit rider, which allows you to receive a portion of your death benefit if you are diagnosed with a terminal or chronic illness. You can use this money to pay for medical bills, living expenses, or other needs.

The accelerated death benefit rider is usually included in most life insurance policies at no extra cost. The amount you can receive depends on your policy terms and conditions. Typically, it ranges from 25% to 100% of your death benefit, up to a certain limit. The amount you receive will be deducted from your death benefit when you die.

4. Life Insurance Can Be Flexible and Adaptable

Life insurance can also offer flexibility and adaptability to suit your changing needs and preferences.

For instance, you can choose the amount and duration of coverage that fits your budget and goals. You can also adjust your coverage amount or term length as your circumstances change, such as getting married, having children, or retiring.

Additionally, you can add or remove riders to customize your policy and enhance your benefits. Riders are optional features that you can attach to your policy for an extra cost. Some common riders are:

• Disability waiver of premium: This rider waives your premium payments if you become disabled and unable to work for a certain period of time.
• Accidental death benefit: This rider pays an additional amount on top of your death benefit if you die as a result of an accident.
• Child term rider: This rider provides temporary coverage for your children until they reach a certain age or become independent.
• Long-term care rider: This rider allows you to use a portion of your death benefit to pay for long-term care services, such as nursing home, assisted living, or home health care.

Riders can help you tailor your policy to your specific needs and concerns. They can also provide you with more value and protection for your money.

5. Life Insurance Can Give You Peace of Mind

Lastly, one of the intangible but valuable benefits of life insurance is that it can give you peace of mind.

Knowing that your family will be financially protected and taken care of after your death can reduce your stress and anxiety. You can sleep better at night knowing that your family will not have to struggle or compromise.

Life insurance can also help you leave a legacy for your loved ones or a cause that you care about. You can name anyone or anything as your beneficiary, such as your spouse, children, grandchildren, friends, charity, or church. You can also create a trust or a foundation with your life insurance proceeds to support a specific purpose or mission.

Conclusion

Life insurance is more than just a death benefit. It is a powerful tool that can help you and your loved ones in many ways. Whether you want to provide financial security, cover final expenses, access lifetime benefits, customize your policy, or enjoy peace of mind, life insurance can offer solutions for your needs. If you are interested in getting a life insurance policy or learning more about your options, contact us today for a free quote.