What Does a Life Insurance Policy Pay For?

Simply put, a life insurance policy that pays a lump sum of cash can be used for many important things.  To help you think through the most important reasons why life insurance might be right for you, please review this list and consider how the cash might be useful (or necessary) to you and your loved ones:

  • Immediate cash needs (paying bills)

  • Final expenses (burial, cremation, funeral)

  • Mental and physical health recovery (grief counseling, yoga, vacation)

  • Final medical expenses (the average person accumulates 70% of their lifetime medical expenses from the last medical treatment prior to death)

  • Consumer debt liquidation (credit card balances, auto loans, unpaid notes, education loan debt)

  • Establishing an emergency fund (for home repairs, major appliance replacement like television sets, refrigerators, dishwashers, and automobile repairs or replacement)

  • Mortgage redemption (outstanding balance of a home loan) or a rent fund

  • Dependent care / childcare

  • Education for children and/or surviving spouse/partner

  • Costs of estate administration (including federal estate taxes, state death taxes)

  • Possible relocation expenses

  • Leaving money to a cause, charity or organization

  • Funds to carry out a business continuation agreement