We prepare for a loved one’s birthday because we know that it is fast approaching. We also prepare for our child’s graduation and we want to have it celebrated as perfect as it can be. We prepare for these events because we are certain that they will come even though realistically speaking, we only have set dates to be certain. If we can prepare for these events that are sometimes on multiple occasions, it is just wise enough to also prepare for something that may not have defined date but will certainly come.
Death is still considered as a taboo topic for most, but it is in this context that life insurance companies anchor their offered policies. Fortunately, the number of people who realized the benefits of insuring themselves have exponentially grown over the years. But what really are the ultimate benefits of life insurance and how can it help you with preparing for the inevitable?
Generally speaking, life insurance can give you both security and options in you and your family decisions. This is primarily evident to be influential to an individual’s financial plans that eventually channel to other life aspects. The main purpose of life insurance is to provide you with an assured amount of benefit (usually in a form of cash but can also be other financial products or both) that will be left to your family and/or chosen beneficiaries in case you pass away. That being said, a life insurance policy is a form of a will that you fund to secure the immediate financial future of your family and/or chosen beneficiary after you’re gone.
Important note: In the context of life insurance, your family may not always be the chosen beneficiary in the policy. Hence, for clarification purposes, this article uses “and/or” to accommodate both terms.
There are different types of life insurance and they differ in terms of their set period, cost, and conditions. Hence, it is important to know them and asses their features if they suit your financial plans and capacity. Nonetheless, these life insurance policies can give you more options in making your financial decisions. For example, a life insurance policy can help you shell out funds when you most need it. Check out below to know what other ways life insurance can help you with your final financial plan.
- Can be used to pay for long-term care
Long-term care pertains to the assistance that an individual requires to perform Activities of Daily Life (ADL) like bathing, eating, walking, dressing, and the like. This may due to a debilitating disease, a chronic disorder or the inability brought by old age. In case you, as the insured, needed long-term care, you can use a portion, if not by full, of your life insurance premium to pay for it. There are features in different policies that allow this at certain conditions.
- Can be used to pay for final costs and obligations
It is already understood that one way or another, the insured will use the death benefit. In the event that this happens, you can specifically instruct your insurer beforehand to pay for the final expenses that you or your family might incur like funeral service, remaining medical balance uncovered by health insurance, taxes, and other outstanding payables. Many insurance companies already include this feature in the basic coverage of life insurance. You can also inform your family and/or beneficiary of this option.
- Can be used for charity
This option is not a popular one for most people due to the low number of insurance policyholders who avail of this. But this feature allows you to name a specific charity as one of your beneficiaries. Usually, policyholders who don’t have an immediate family as a beneficiary or simply those who choose to accommodate a charity as their beneficiary select this feature. This is a good way to ensure that your advocacy goals will continue as a legacy even after you pass away.
- Can be used as a form of inheritance
Your life insurance can be the inheritance you leave to your family and/or beneficiary. Most people have this in mind and sometimes the very reason for purchasing life insurance. Typically, the benefit that your chosen beneficiary will receive is tax-free. It is important to note though that you have to settle the legitimacy of your chosen heir and name them specifically as beneficiary.
- Can be used to pay estate tax and outstanding mortgage
In some cases, people who receive inheritance can automatically incur estate tax. This can happen if the inheritance that they received is not in a form of a death benefit or it is not covered in the policy. You can still use your life insurance to pay or waive this cost, in partial or full. It is highly recommended that you seek advice from an independent financial expert to learn how this feature works.
- Can be used to pay for other costs
You can use your death benefit to secure other foreseen costs that your family might have. This includes education, advancement or change in career, medical needs, property costs like mortgage, business venture, and other obligations and commitments that need appropriate financial action.
Most people don’t think about getting life insurance for many reasons. It could be because of financial incapacity to avail insurance, other present financial priorities, or simply because they don’t yet realize the benefits that they can get from it. Moreover, the idea of life insurance is seldom discussed in the family. Usually, families come up with it when a loved one is already of old age or with a chronic disease. Although this is still a good move, starting later in life will cost you a significantly higher amount of payment compared to when you start at a younger age.
We may have our reasons, but the benefits of life insurance are evidently helpful in managing our final financial plan. Not only does it give you the option to allocate your wealth to your family and/or beneficiary after you pass away but also allow you to use that same wealth to secure your future plans. At the end of the day, it is still prudent to plan ahead and be informed as much as possible. Take time to explore the market of life insurance, seek professional advice, look for the best life insurance cover and the right insurance company that will provide you with such.