Life insurance is a vital part of protecting your family from financial disaster after you pass away. However, many people do not have it and are unaware of its importance. Many people believe that life insurance is too expensive, so some opt for nonprofit insurance options.
A life insurance policy can help protect your family’s financial future after you die. Not only can having a policy protect them financially, but it can also serve as an inheritance. Below are some benefits of having life insurance.
- Payouts Are Not Taxed
If you die while your life insurance policy is in effect, your beneficiaries are entitled to a lump sum death benefit. This type of insurance is typically not considered income for tax purposes.
- Replace Income Or Pay Debts
Your life insurance benefits can help pay for various expenses your beneficiaries have, such as paying off debts or paying for college. It can also be helpful to pay the mortgage, rent, and utilities. A life insurance policy that’s equal to or greater than your annual income is a great way to help people who rely on you for support.
- It Can Pay For Your Funeral
Some life insurance policies can also be used to pay for certain expenses after you die. The average cost of a funeral in 2019 was $7,640. Despite having enough savings to cover an emergency expense, many Americans still do not have enough to cover a funeral budget. Some insurance companies offer final expense policies, which are usually low-cost policies. Having a life insurance policy will take the stress off of your loved ones when it’s time to
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