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How to Protect Your Family Using Life Insurance

Do you need life insurance? Chances are yes.

Life insurance is designed to protect your family and loved ones after you’ve passed away. Investing in life insurance is especially important if you’re financially responsible for a child, partner, aging parent, or disabled loved one.

Why? Life insurance helps to provide financial security for your family and loved ones following your departure. Let’s discuss how to protect your family and loved ones with life insurance.

What is Life Insurance?

Life insurance is a contract between a policy owner and a life insurance company. In this contract, the life insurance company promises to pay a designated beneficiary a death benefit upon the passing of the insured.

Most of the time, that death benefit is paid income tax-free to the beneficiary.

Life Insurance Options

There are two main categories of life insurance available:

  • Term life insurance, and
  • Permanent life insurance

Simply put, term life insurance is less expensive and lasts for a period of years whereas permanent life insurance lasts for an insured’s lifetime, and is, therefore, more expensive. Permanent insurance also has a tax-advantaged cash value component that can be accessed by the policy owner during the insured’s life.

Interested in learning more about the differences between each? Check out our article “Term Life Insurance vs. Permanent Life Insurance.”

The Benefits of Having Life Insurance

Life insurance coverage can help in the following ways:

Provide Financial Security

Life insurance can help replace lost income after one passes away. The death benefit of a life insurance policy can be used for any number of reasons, including to:

  • Pay monthly bills and day-to-day expenses
  • Pay off debt (i.e. mortgage, car loan, or credit card)
  • Pay federal and/or state estate taxes
  • Provide an inheritance

Cover End of Life Expenses

Death is expensive—and often is a cost most families don’t want to be troubled with, especially following the death of a loved one. Life insurance can help a family pay for end-of-life expenses like burial and funeral services, cremation, burial plots, caskets, etc. 

Pay for Medical Bills

Life insurance can help a family pay for hefty medical bills if the insured passes away from health-related issues. There are also policies with optional benefits that can help pay for ongoing chronic or terminal illness care expenses.

Supplement Educational Expenses

If the deceased loved one has children or grandchildren, life insurance can help pay for educational expenses (i.e. college or private school).

Consider Cash Value Life Insurance

Cash value life insurance is permanent coverage—insurance that is designed to last for the insured’s lifetime—that includes a tax-favored investment account that the policyholder can use while the insured is still alive.

(Yes, cash value life insurance allows you to financially help your family and loved ones while you’re still living – and it grows tax-deferred!)

The cash value can be used to offset future premiums and/or accessed tax-free, for any reason, using either policy loans or withdrawals. This component adds flexibility and provides an immediate tax-favored source of income for retirement, travel, healthcare needs, or emergencies.

Read on to learn more about cash value life insurance.

Infographic of "How to Protect Your Family Using Life Insurance"

Partner with Acumen Insurance Solutions to Protect Your Family

There are many other benefits to owning life insurance. Life insurance could help keep a family business running or provide a charitable legacy—the options are endless.

Remember, it’s better to buy life insurance sooner than later. Why? Life insurance is less expensive the younger and healthier you are.

Moreover, your life insurance needs will evolve over time – so best to get familiar with your options now. Interested in learning more? Read on to see how your life insurance needs might change in our article “Can I Change My Life Insurance?