Life insurance provides families with money at a time when they need it the most. Beneficiaries can use life insurance death benefits, both from term life insurance and permanent life insurance, however they wish.
How soon will my beneficiaries receive the life insurance death benefit?
The life insurance company will not automatically know that one of their insured clients has died. Your beneficiaries will need to send in a claim form along with a death certificate. The life insurance company will then pay the death benefit within a few days of receiving the claim.
» Learn more: How to File a Life Insurance Claim
If you, the insured, die within the contestability period, this is often the first two years of the life of the policy, paying the death benefit may take longer if the insurance company thinks it’s prudent to investigate the accuracy of the information you put on your application.
Families should rely on emergency funds if they need money immediately following the death of a loved one. While life insurance companies do make every attempt possible to pay the claim quickly, it’s not instantaneous.
The Use of Life Insurance for Daily Living Needs
Term life insurance is most commonly known as income replacement. The death benefit from a term life insurance policy replaces the income that was once provided by a now deceased spouse or parent.
» Compare: Term life insurance quotes
You buy life insurance to protect your loved ones to ensure they can continue living as they always have. This means you’ll want to buy enough life insurance that will allow them to continue paying the mortgage, car payments, internet and cable TV bills, school athletic programs, gym memberships, etc.
Even if the household budget does need to be trimmed after the death of a provider, life insurance can ensure it at least does not need to happen immediately. Perhaps your children go to a private school. If a parent dies without life insurance, can the surviving parent afford the private school tuition on one income or will the children need to be transferred to a public school? This abrupt change in a child’s life along with the death of a parent would be devastating. Life insurance can help keep your family’s standard of living unchanged, at least for a little while, as they decide what can be adjusted and what should remain the same.
The Use of Life Insurance for Final Expenses
Do you want to be buried or cremated? Your wish comes with certain costs. The