The main aim to purchase life insurance is to provide one's family with financial protection in the event of death. If someone does not have life insurance, and he or she dies, the survivors would be left with financial burden due to the loss of income. In addition to financial protection, life insurance provides many other functions. Quickhealthinsurance examines life insurance for both its personal and business uses.
Life insurance for personal uses
The primary function for having a life insurance policy is to provide your family a means to meet financial obligations after your death. The uses of life insurance for major expenses and other personal uses are as follows:
- Medical bills - prior to your death, you may require a lot of medical check-ups and treatment and there could be outstanding bills.
- Funeral expenses - your life insurance can meet the cost of your funeral.
- Rent or mortgage payouts - without your income, your family may find itself burdened financially. The insurance pay-out would meet the monthly living expenses.
- Estate planning - if your assets are worth over $12 million, the insurance payout helps the beneficiaries to meet the high estate taxes.
- Income replacement - your insurance would act as another means of income to your dependents when your regular income is not there.
- Charity / donation - you can use your insurance to leave your death benefit to favourite charity, a church or an alumni association.
- Loans - cash value building policy can be borrowed against for short-tem debts.
- Outstanding debts - there may arise more debts after your death which the death benefit can meet.
Business purpose life insurance
Owners of businesses can use the proceeds of life insurance policy to meet the different financial needs of their business. These include:
- Business continuation - your life insurance can be used for easy transition of your business to your family members, and help your business to operate after your death.
- Employee bonus - your insurance policy offers tax-deductible benefit to the employees.
- Key Person - a life insurance policy is bought on the life of the key person of your business. The insurance payout can be used to replace the key person.