Unexpected Uses for Your Life Insurance Policy

Nobody likes to think about life insurance, but it’s essential to have a policy in place if you want your family taken care of should the worst happen. However, the benefits of life insurance extend far past what we usually think about. It can be useful to think about life insurance as an investment — not just a safety net. 

There are uses for life insurance that go beyond covering funeral expenses. So, here are some other ways that a life insurance policy payout can be used to protect your loved ones. 

1. Pay Kids’ College Tuition

College education is expensive! Many people start saving early, when their children are barely walking. Yet a sudden death in the family can make paying for college much more difficult.

Here’s the good news: Some types of life insurance can help cover the costs of higher education if set up properly to accumulate a cash value component.  When you have a policy in place, it can help defray soaring tuition costs should the unexpected happen. In the event of your death, the proceeds of your policy can be used for a variety of educational scenarios, providing care for your loved ones.

2. Help Cover Mortgage Payments 

In an ideal world, we would all pay off our mortgage balance before retirement. But for lots of reasons, that isn’t always possible. One way to put your family in a great position to keep the family home is with a life insurance policy, which can help pay off a mortgage after you’re gone. Having a policy could protect your family from the obligations of making mortgage payments should your salary no longer be available to them.

3. Use Life Insurance to Keep a Business in the Family

Certain taxes may apply when passing a family business to the next generation, and those younger members of the family may not be in a financial position to pay them. This is where you can help. Life insurance for business owners can help cover those costs, easing the tax burden on the future owner of your business and your other family members and making the transition smoother.

4. Offset the Costs of Chronic Illness

Adding a daily living rider to your life insurance policy can create a huge advantage if you’re dealing with a debilitating scenario such as chronic illness. If you become unable to perform necessary daily activities, such as dressing or bathing, you may have early access to your policy’s death benefit, easing the costs of care. The remainder goes to your beneficiaries when you pass away.

5. Cash Value to Pay for Elder Care

If you’re able to tap into the cash value of your life insurance policy, you could use that money to care for an elderly relative. While nobody can predict when a family medical emergency will arise, ensuring that you are financially ready will curb the stress should a situation arise.

6. Establish Legacy Planning and Giving

One of the benefits of life insurance is that it offers a source of tax-free money. If you’d like to pass along a legacy in this manner, the policy can help with making charitable contributions. This form of legacy gifting is one of the most overlooked uses for life insurance. 

There are several ways you can utilize your life insurance policy to make a lasting impact after you’re gone:

• Name a charity as a beneficiary of your life insurance policy.
• Give the life insurance policy to a qualified charity.
• Gift policy dividends.

Learn the Many Benefits of Life Insurance

Your life insurance policy can be a huge benefit to your family in unexpected ways. That said, all of these scenarios could have an impact on the death benefit, meaning they all affect what your family will receive. So, reach out to your Farm Bureau agent to compare types of life insurance that can work for you.