In the event of the death of the insured, life insurance is designed to create capital precisely in the unpredictable event of death. It provides a precautionary financial strategy to stabilize the financial security of loved ones reliant on your income or your capital provision.
Current one-time capital uses are provided by life insurance, such as:
- Pay off liabilities such as credit cards, bills outstanding, loans, and/or estate taxes upon death.
- Pay for the final expenses associated with a funeral and burial.
- Create money to pass on to heirs such as children or a spouse.
An ongoing future use of capital is provided by life insurance, such as:
- Investments can be purchased from which to create an income to cover the living expenses of a family; often providing for the retirement of a spouse.
- Funds can establish a trust, from which family can acquire income.
What if an insured lives and cannot work due to a disability?
The individual should include some form of disability coverage to replace his or her income. Talk to your advisor about the following other types of insurance:
- Income Replacement Insurance: This covers a percentage of your income in the event that you cannot work for a certain period of time due to a disability; some allowing coverage for a lifetime.
- Critical Illness Insurance: In the event of a critical illness such as a stroke or heart attack, a significant lump sum benefit can be paid, depending on the plan’s coverage.
Check your group insurance benefits at work which should be considered when buying the above insurance.