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May 17, 2024
Variety Insurance

Life Insurance for Final Expenses and Estate Planning

Life insurance establishes a contract between an individual and an insurance company, where the insurer may pay a designated beneficiary a sum of money upon the death of an insured person. But beyond this basic definition, life insurance can also offer financial assistance in other ways, particularly concerning dealing with final expenses and estate planning.

Final Expenses babys hand on human palm

Final expenses can be considered as the costs associated with the death of an individual. This may include funeral and burial costs, medical bills and any outstanding debts such as mortgages, car loans or credit card balances. Given the potential enormity of these expenses, lacking sufficient funds and resources could lead to significant financial stress and have far-reaching ramifications for a deceased’s loved ones.

An adequate life policy’s payout can provide funds to help cover these expenses, potentially relieving the family of these financial burdens during an already difficult time. Furthermore, the death benefit from a life policy can often be paid out relatively quickly—often within a few weeks of the filed claim—ensuring these costs can be covered promptly.

Estate Planning

In addition to often covering final expenses, life insurance can play a crucial role in estate planning. Estate planning typically involves preparing for the transfer of an individual’s wealth and assets after their death. Life insurance can provide a lump sum death benefit that can be used to pay estate taxes, thus preventing the need to sell off assets to cover these costs.

Moreover, life insurance proceeds may not be subject to income tax, which could mean the beneficiaries can receive the full amount of the policy. This can provide significant financial support to the beneficiaries, helping them maintain their standard of living or even fulfill the deceased’s wishes, such as funding a child’s education or supporting a favorite charity.

Life insurance can also be used to equalize inheritances, especially when certain assets, such as real estate or family-owned companies, may be challenging to divide. For instance, if a family business is to be left to one child, a life insurance policy can help facilitate the process of ensuring other descendants receive an equivalent inheritance.

We’re Here to Help

Life insurance can be a versatile financial tool that may provide fiscal support and peace of mind for insureds and beneficiaries. However, these policies come in many forms and various options may be complicated or confusing.

With this in mind, enlisting the assistance of a knowledgeable life insurance agency, such as Variety Insurance Agency, can ensure individuals and families secure ideal policies. Visit our website or call 479-365-2233 to learn more.

 

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information. 

Categories: Life Insurance