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What Would a Life Insurance Policy Actually Pay For?

Most consumers understand that life insurance is used to provide a lump sum of money (a death benefit) upon the death of the person or persons who purchased the insurance. But what many lack is a robust understanding of just what that death benefit might be used for, and the truly powerful role it could play in providing financial security and protection in the midst of terrible tragedy.

End of Life Costs

Leaving this world, much like entering it, is expensive for those overseeing the process. While it is always possible that a policyholder’s life may be cut off suddenly and without warning, it is more likely that their last days, hours, or minutes would involve costly medical expenses, resulting in bills that would fall on loved ones and family members. While medical insurance can help, these costs can be significant, particularly when they arrive at the same time as funeral expenses.  2

Funeral Expenses

Funerals are also expensive, surprisingly so for those who have never had to deal with planning or paying for them in the past. Loved ones should not be put in a position where they are torn between honoring the dead and making responsible financial decisions from a place of reduced savings and income. 2

Housing Costs

According to government figures, the average monthly housing cost in the United States in 2013 was $1,429, making up 33% of annual consumer expenditures.[1] Consider your own family, your savings, and your income. If your household’s main breadwinner died, how long would your family be able to keep paying to keep a roof over your head? A death benefit can cover those housing costs for far longer, giving loved ones time and security.  2

Child Rearing Costs

For countless Americans life insurance only becomes a priority when children are on the way—and it’s easy to see why! Children are expensive to feed and clothe and even dual income households can struggle with the cost of nanny services or daycare. But what if one of those incomes was suddenly gone? Or what if a family with a single breadwinner was suddenly left with no significant source of income at all? A death benefit, in these cases, would provide for caregivers, food, toothpaste, backpacks, new shoes, and maybe even college tuition. It allows a parent to provide for their offspring and fulfill their financial responsibilities, even in death. 2

Estates and Inheritances

Once an individual has grown, worked, saved, and retired it may seem like the need for life insurance has run its course. But what if that individual owns a business and wants to see it passed along to a family member or partner without incident? Or what if the individual’s estate has creditors who, during probate, could claim property that one would rather see go to children or loved ones? Permanent Life Insurance, including Whole and Universal Life, can provide an infusion of cash that can satisfy creditors and taxes to ensure proper estate transfers, or which can simply be used to provide a final parting gift and inheritance to children, grandchildren, or other loved ones. [2]

For more information on sharing the resources a life insurance policy can provide, contact Simplicity Life today! 800.921.3100

[1] http://www.bls.gov/cex/csxann13.pdf
[1] https://www.quotacy.com/why-buy-life-insurance/









The information contained herein is for general information purposes only. Simplicity Life is not to be held responsible for the accuracy of this information. Neither Simplicity Life nor its employees provide tax or legal advice. As with all matters of a tax or legal nature, your clients should consult their own tax or legal counsel for advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax adviser.

The information, statistics, and opinions reported herein are from sources believed to be reliable. However, Simplicity Life and the author of this blog do not guarantee the truth, accuracy, and reliability of any source, fact and/or statistic cited and no do necessarily agree with any opinions expressed by such sources.

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