1. An instant estate.
Wills often have to go through probate. Life policies, however, usually bypass the lengthy judicial process, as long as the named beneficiary is alive. In other words, with life insurance, your surviving family will have the financial support it needs almost immediately rather than having to wait for probate to close.
2. Money for final expenses.
Funds to cover funeral costs, legal fees, unpaid taxes, and hospital or doctor bills are usually available more quickly when they come from a life insurance policy rather than the deceased’s estate.
3. A living benefit.
Some policies let you withdraw a certain amount of money tax-free while you’re still alive, without incurring a penalty. You can use the funds for big expenses, such as college tuition or emergencies. A small-business owner who closed his shop due to COVID-19, for example, might have been able to take money out of a life insurance policy to cover payroll through the shutdown.
4. An inheritance or a sizable donation.
If you’d like to leave something to your heirs but don’t have other assets, you can purchase a life insurance policy and name them as beneficiaries. The same goes for posthumous charitable contributions: Just name the organization as the beneficiary.
5. Long-lasting protection.
Many employers offer group life insurance as a free or low-cost benefit that has a relatively low coverage amount. The caveat is that the plan can disappear if you leave your job, retire, or are let go. For that reason, it’s smart to look into supplementing that coverage with an individual policy. Many individual policies let you lock in your premium for 20 to 30 years.
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