Life insurance proceeds can allow the bereaved to properly grieve without worrying about money. It gives families the financial protection that’s needed for potential funeral costs, living expenses, or even their financial future. If you’re on the receiving end of the policy, the large sum of money can present many challenges, but also a multitude of opportunities. Here are some ways you can use your proceeds wisely:
- Pay off high-interest debt. If you have any high-interest credit card balances or loans weighing you down, eliminate these debts first. This liberates disposable income that can be applied towards your retirement savings.
- Build an emergency fund. Having savings earmarked for emergencies will help prevent you from borrowing money or even dipping into your retirement accounts. The rule of thumb is to put away at least three to six months’ worth of expenses.
- Purchase an annuity. This financial instrument comes in many forms depending on your goals and situation. It’s designed to provide a guaranteed stream of income that begins immediately or in the future. It can be a secure way to ensure that you don’t outlive your assets.
There’s no single right way to use the death benefit of a life insurance policy. To make an informed decision, the first thing you can do is take a step back and take into account all factors and possibilities. During these difficult times, you can lean on us for advice and guidance. Reach out to us and our team of experts can help you identify strategies to best meet your financial goals.
This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.