What Does Life Insurance Pay For?
Purchasing life insurance is a you are able to their loved ones can be taken care of financially when they pass away
. If you are thinking about buying life insurance, you may be confused about what it will do for your family when you die. There are several different ways that the money from a life insurance policy could be used to help your family. Here are a few things that your policy may pay for.Final Expenses
Typically, a life insurance policy will first be used to pay for the final expenses of the deceased individual. For instance, when you die, your family may use the money from the life insurance policy to pay for your funeral, your casket, burial clothes, and other related expenses. These costs can add up to many thousands of dollars and most families don't have enough money to pay for these expenses out of pocket.
Paying the Mortgage
The biggest debt that is usually left behind when a person dies is the mortgage. If you are in the process of buying a home with your spouse, the mortgage debt could amount to hundreds of thousands of dollars. Your spouse could use the money from your life insurance policy to pay for this mortgage debt so that the house will be paid off.
Other Debt
In many cases, the individual who passes away leaves behind other debts as well. For example, you might leave your family with credit card debt, student loans, auto loans and other debts. The proceeds from a life insurance policy can be used to pay for this debt as part of finalizing the estate.
Income Replacement
If you were the primary income earner for your family when you pass away, the life insurance policy will probably be used to replace your income. Most life insurance companies recommend purchasing a policy that will provide enough benefits for loved ones to have money to live on for several years. For instance, you may have purchased a policy that provides enough money for your spouse and family to live for 15 or 20 years without working.
Getting Life Insurance
If you are concerned about how your family will pay for these things when you are gone, you might want to get some life insurance quotes on policies as soon as possible. By getting life insurance quotes from several different companies, you can get an idea of how much this coverage should cost and then choose a policy that will provide what your family needs.
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