Life Insurance 101
What does life insurance cover?
A life insurance payout is flexible — your beneficiaries can use it however they need. In practice, it tends to cover three kinds of expenses.
Immediate expenses
- Funeral and burial costs;
- Uncovered medical expenses;
- Mortgage or rent, so the family can stay put;
- Car loans and credit card debt;
- Taxes and estate settlement costs.
Ongoing expenses
- Food, housing, and utilities;
- Transportation and healthcare;
- Income replacement to maintain the family's standard of living;
- Keeping a family business running.
Future expenses
- Education costs for children;
- Retirement support for a surviving spouse.
The bottom line
Life insurance is a powerful tool for providing financial security in a loss — meeting both the immediate and long-term needs of the people you support.
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