Life insurance can be a crucial part of a financial plan that provides protection and security for your loved ones. In the tragic case of your death, life insurance proceeds may be able to help your family and dependents in more ways than you would think:
1. Cover Death Expenses:
Death in the family can lead to heartbreaking emotions and additional stresses. Life insurance can help your family cover the costs of your death expenses; for example, it could cover the cost of a funeral or probate fees thus alleviating some financial stress.
2. Maintain Life Style:
Life insurance proceeds can provide security in your family’s life style if they were to lose your income. It can ensure your family is taken care of pursuant to your priorities, be that by ensuring your partner lives a fulfilling retirement or paying for your children’s education and child care.
3. Pay Off Debt:
Payments on your debts are still required after your death. Life insurance proceeds can continue to make payments on loans and mortgages protecting your family from falling into deeper debt themselves.
4. Transfer Assets:
In case of your death your assets may not transfer across generations of your family as smoothly as you would assume. Life insurance proceeds can provide your family available funds to pay the taxes on transfers of properties allowing your prized possessions to stay within your family.
5. Business Security:
Life insurance can be critical for business continuity in the event of a business owner’s death. If a key member of a business passes away suddenly or becomes disabled, the entirety of the organization can suffer in both the short and long term. Life insurance proceeds payable from a business or key person insurance policy can help fund recruiting and hiring of a replacement, paying off debt, and reassuring customers and employees the business will stay open.
A buy sell agreement is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies, and often requires disposable income. Insurance can help make these transactions run smoothly. Life insurance can fund predetermined the buy-sell agreements between owners; using the proceeds of the insurance to “buy out” the ownership of the deceased owner.