Life insurance covers a variety of expenses after the policyholder passes away. This insurance doesn’t only provide assistance with funeral expenses. It can also help with the costs left over after the policyholder is gone, such as shared mortgages and income loss.
So how do you make sure your family won’t lose their home when you’re not there to care for them?
First, it’s important to note that every home and family is different. Life insurance policies are not “one size fits all” policies. Your life insurance may look very different from your neighbors, even if you live in a home of around the same value.
In general, it’s recommended that policyholders purchase at least 10 to 15 times their income. This is because once a policyholder is no longer able to pay their share of bills with the income they’d normally receive, the remaining beneficiaries will have to find a way to pick up the loss. Having a policy worth ten times your income will offer a helpful cushion to beneficiaries once the life insurance claim is paid out.
How Life Insurance Claims are Paid
When a life insurance claim must be made, beneficiaries may receive a single lump sum or monthly payments of set amounts. If your goal is to ensure the family will remain in their home, it may be best to choose monthly payments to make up for the lost income that would go to the mortgage. Once the life insurance claim is made, the insurance agency will investigate the claim to make sure the cause of death falls under the scope of the policy. If the claim is approved, the beneficiaries will receive compensation.
Who to Name as Beneficiaries
Beneficiaries are those listed on a life insurance policy to receive compensation after the policyholder passes away. Beneficiaries are typically family members and spouses. If you would like to provide compensation to your family to stay in their home, it’s important to consider who is listed on your policy and how much compensation they will each receive. It’s impossible to have only one beneficiary, such as a spouse or a family member, who will be in charge of the household or the household’s finances.
Be sure to speak with an insurance agent and advisor before deciding on an insurance policy to guarantee your family receives the help they need.