Life insurance is a contract between a policy owner and a life insurance company that guarantees the insurer pays a sum of money to one or more named beneficiaries when the insured person dies in exchange for premiums paid by the policy owner. Life insurance provides a financial safety net for loved ones if the policy owner passes away, and the beneficiaries can use the money paid out by a policy for whatever purpose they choose. Here are some common uses of life insurance benefits:
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Paying final costs: Life insurance policy benefits can be used to help pay for final expenses after the policy owner passes away. This may include funeral or cremation costs, medical bills not covered by health insurance, estate settlement costs, and other unpaid obligations.
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Paying off debt or replacing income: Life insurance benefits can help replace the policy owners income if they pass away. This means the beneficiaries could use the money to help cover essential expenses, such as paying a mortgage or college tuition for their children. It can also be used to pay off debt, such as credit card bills or an outstanding car loan.
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Inheritance: Life insurance policies can also be created with a favorite charity as a named beneficiary. This can help ensure philanthropic goals are met after the policy owner passes away, and that benefits are provided to the charity of choice.
Life insurance can also provide financial security, help to pay off debts, help to pay living expenses, and help to pay any medical or final expenses. It can give lasting peace of mind in terms of the assurance that the policy owner has provided a legacy.
