Here for every stage of your life. (855) 436-6552
Partners for Life — Insurance Agency & Financial Services
EspañolEnglish
← Back to articles

Six Potential Financial Benefits of Buying Life Insurance

Life insurance is considered by many to be a cornerstone of family finances. Here are six reasons why:

  • Replace income for dependents

    When a person with dependents dies, life insurance can replace income for their family. The most common example is parents with young children. Insurance to replace income can be particularly useful if government- or employer-sponsored benefits for the surviving spouse or domestic partner will be reduced after the person’s death.

  • Pay final expenses

    Life insurance can pay funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.

  • Create an inheritance for heirs

    Even people who have no other assets to pass on can create an inheritance by buying a life insurance policy and naming their heirs as beneficiaries.

  • Pay federal and state “death” taxes

    Life insurance benefits can pay estate taxes so heirs do not have to liquidate other assets or receive a smaller inheritance. Changes in federal “death” tax rules through January 1, 2011 are likely to reduce the impact of this tax on some people, but some states are offsetting those federal reductions with increases in their state estate taxes.

  • Make significant charitable contributions

    By making a charity the beneficiary of their life insurance policies, people can make a much larger contribution than if they donated the cash equivalent of the policy premiums.

  • Create a source of savings

    Some types of life insurance build cash value that, if not paid out as a death benefit, can be borrowed against or withdrawn at the owner’s request. Because most people place a high priority on paying their life insurance policy premiums, buying a cash value policy can create a kind of “forced” savings plan. In addition, credited interest is tax-deferred and is tax-free if the money is paid as a death claim.