What Does Life Insurance Pay For?
If you currently own life insurance, or are considering the purchase of a life insurance policy, you may be wondering what life insurance actually covers, or pays for.
Like most people, you want to make sure your family is financially secure if you pass away, and able to go on living without the financial stress of trying to make ends meet without your income to help support them.
What Does Life Insurance Cover?
Life insurance is a way of helping your family cope financially after you die.
It is intended to provide help to your loved ones when they can't rely on your salary or income any longer. The pay-out from your life insurance policy can be used to pay down debts, pay off the mortgage on a home, or just cover everyday living expenses.
Here are some common examples of things people choose to use the money they receive from life insurance to buy or pay for:
- Pay Off Mortgage Loan
- Pay Off Car Loan
- Pay Off College Loan
- Pay for College Education
- Pay for Purchase of a New Home
- Pay for Vacation
- Fund Retirement
- Pay for Living Expenses
- Pay Off Hospital or Medical Bills
- Pay Off Credit Card Debt
- Pay Off Personal Loans
- Invest in Stocks of Other Financial Instruments
- Make Charitable Contribution
- Donate to Church
- Donate to School
- Buy Food, Clothes, Computer, Glasses, TV, Phone, Toys, Video Games, etc.
- Lend or Give Money to Friends and/or Family Members
- Pay for Wedding
- Pay for Honeymoon
- Pay for Elective Surgery
- Pay to Renovate Home
- Pay for Final Expenses
- Pay for the Deceased Person’s Funeral and Burial Costs
Basically, the money a beneficiary receives from the payout on a life insurance policy can be used by the recipient any way that person chooses to spend the money.
Usually, the money is paid to the beneficiary free from any federal income taxes.
The money can usually be paid to the beneficiary in a lump sum, or the person can use checks that draw on the amount in the account of the death benefit.
Another option may be monthly payments, instead of receiving one lump sum.
The options for how the death benefit is paid out may vary by insurer, and the beneficiary has the option of choosing the type of payment method.
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What Does Life Insurance Pay For?
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