5 Ways Life Insurance Protects Your Loved Ones

happy family

Introduction

What role does insurance play in safeguarding your future finances? For those who are thinking ahead and trying to figure out how to provide for their families financially, this may have crossed their minds.

As such, it may be wise to invest in a family security plan that includes life insurance, which will, at the very least, ensure that your nearest and dearest can continue to meet their basic needs in the event of your untimely demise. On that note, let’s look at how a life insurance policy protects your loved ones.

How Does Life Insurance Protect Your Loved Ones?

1. Offers Financial Security

Having life insurance can assist in substituting your earnings if your household relies on it to pay for basic living needs such as rent, utilities, and food. In addition to covering final expenses, life insurance can be used to settle outstanding bills like mortgages, auto loans, and credit card balances. A family with children allows for greater time and opportunity for both parents to be at home.

2. It Can Help Pay For College Funds

The proceeds from your life insurance policy can be utilized for various purposes, including sending a child to university. As an additional perk, the financial value you build up in a permanent life insurance coverage can often be withdrawn or borrowed against while you’re still alive using a policy loan.

3. Helps People Run Family Businesses

Succession planning is an important part of long-term business and estate planning for any enterprise, such as a farm, to guarantee that the firm is carried on successfully by the next generation.

The transfer of a family business from one generation to the next can sometimes be subjected to certain taxes. Having life insurance to pay these costs can reduce the burden of taxes on the next generation of business or farm owners and their families.

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4. Helps Pay Unexpected Bills

In the wake of your passing, your family members may be forced to deal with unforeseen expenses. If a parent who normally stays at home passes away, the family may have to shoulder more of the burden of child care, cooking, and other chores.

The death benefit from life insurance coverage can be allocated toward these expenses. This allows your loved ones to continue to live comfortably and receive the same level of care from you that they do now, even in your absence.

Estate taxes can be so high that they can wipe out a person’s retirement fund if they aren’t properly prepared. The death benefit from a life insurance policy can be set up so that it isn’t taxable either in the hands of the beneficiary or the estate. In addition, life insurance can be set up in several ways that provide access to tax-free money in the event of a terminal or chronic disease.

5. It Can Cover Medical Expenses

It’s a common misunderstanding that life insurance is exclusively beneficial once the policyholder has passed away. However, some policies offer additional benefits to aid with the cost of treating a severe or chronic condition. There are several situations, like coping with a severe illness, where a “daily living rider” would be a great help.

The rider allows you to collect a portion of your policy’s cash amount early if you cannot care for yourself in the usual way, like bathing or cleaning yourself, with the remaining funds to go to your beneficiary after your death.

However, this rider should not be seen as a replacement for long-term treatment or disability income coverage; rather, it is an additional layer of protection to help you weather the financial storms of retirement. The rider must be obtained at the time the policy is issued.

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The protection provided by a life insurance policy is crucial to your family’s financial security. Funeral costs, mortgage payments, and the general financial cost of living all add up rapidly and can leave a dent in a family’s budget. Having life insurance can ease your mind, knowing that your loved ones will be taken care of financially in your absence.

With so many alternatives, picking the correct life insurance agency can be difficult. You should talk to a reliable Franklin Life & Annuity agent while considering your alternatives to tailor your insurance to your specific need. We offer comprehensive life insurance and final expense insurance in Houston, Texas. Contact us to learn more about our policies.