Six unexpected ways life insurance can help protect your family’s future

More than just a death benefit, life insurance can help ease the financial burdens for those you are responsible for, throughout your life. 

Article highlights

  • Protecting your business
  • Source of retirement income
  • Covering unplanned expenses

We understand life can get expensive quickly. And every one of us shares the responsibility to plan for and protect the ones we care about most. And with the right financial products, that care shouldn’t change whether you’re there or not.

Here are six unexpected ways the right life insurance policy can help people keep their loved ones from carrying an extra financial burden.

Fund college tuition

You worked hard to help your children succeed, so your financial plans shouldn’t get in the way of their future goals. Consider the possibility of dedicating part of your life insurance benefit to their college tuition. With permanent life insurance, your policy has the potential to accumulate cash value on a tax-deferred basis. Those funds can then be accessed generally tax-free1, during your lifetime to help shoulder the cost of college.

Protecting your business

Business owners should consider the future of their business when shaping their life insurance policy. It’s usually best to keep loved ones who are not involved in the business from having to take on the responsibility of managing the day-to-day operations. An insurance death benefit can fund a buy-sell agreement to protect the business from an undesirable sale, and it also ensures that the business will continue to run as intended.

Save for retirement

Married couples may have built a retirement plan around combined financial contributions. A life insurance benefit can be used to help replace future contributions of the one who has passed. The remaining spouse can then use excess cash to maximize annual contributions to their workplace plans or contributions to an IRA.

Unforeseen bills

After you pass away, your loved ones may encounter some unexpected costs. For example, the death of a stay-at-home parent may mean additional child care, meal and other household costs and responsibilities. The payout from a life insurance policy can be used to cover or defray these costs, to help maintain your family’s quality of life and to care for them as well as you do now.

In some instances, without proper planning, retirement savings could be depleted just to pay estate taxes. A life insurance plan’s death benefit is usually paid income-tax-free and can be structured so that it’s not subject to estate taxes.

There are also different ways to structure your life insurance policy as a supplemental source of tax-advantaged funds to use for any purpose, should someone develop a permanent or chronic illness.

Pay off debts

Eliminating debts can help relieve the financial burden loved ones face, especially when losing a significant other. In addition to the money they owe, they may also have to pay off any debts you’ve left behind. If they served as a co-signer on a loan or jointly held debts, then they may become responsible for those as well. Check the laws of your state to see what your obligations may be.

Cover unexpected medical expenses

A rider on your life insurance policy can help safeguard your retirement savings if you encounter unexpected medical expenses. Added benefits can help make it possible for you to live comfortably at home with the care you need, without financially compromising your beneficiaries. Additionally, you’ll have access to the cash value for other health-related expenses and won’t risk losing your policy. Some riders are included in a policy while others are available for an additional cost and are subject to availability and restrictions.

Although nothing can ever replace the care you offer to those you're responsible for, providing them with access to life insurance benefits is a simple yet extraordinary way to ease financial worries.

Explore what Lincoln has to offer, or ask a financial advisor how life insurance from Lincoln can fit into your financial plan.

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The information above is provided as a courtesy. Lincoln Financial Group does not offer legal or tax advice. We encourage you to see the advice of an attorney or an accountant with any tax or legal issues.

1Loans and withdrawals will reduce the policy’s cash value and death benefit, may cause the policy to lapse, and may have tax implications.