Life insurance has two major benefits. The first is to protect loved ones against the financial consequences of the insured’s death. The second is the living benefits life insurance offers.

The financial consequences of death can be overwhelming, to say the least. When a spouse, parent, child, sibling or grandparent passes away, the emotional turmoil can be crushing. Yet, financial consequences can be even more devastating. If there is no life insurance, surviving family members can be thrust into a position of extreme financial adversity. Not only do you have to deal with a possible loss of future income, but also the death and burial itself generate sudden and unexpected expense.

A look at mortality statistics shows a significant number of people die each year prior to reaching a normal life expectancy. If the deceased is a breadwinner, and they die prematurely, the consequences are tragic in more ways than one. Survivors are not only dealing with profound personal grief, but they must also face serious financial consequences, as they can no longer rely on that breadwinner’s income to help meet daily living expenses.

Aside from the cost of the funeral, other expenses might include an executor’s fees and expenditures involved with estate administration. Outstanding debts, such as car loans, mortgages, credit cards, promissory notes, and even medical expenses will fall on the shoulders of survivors. There are also death taxes, as well as state and federal taxes to consider.

Another factor in a premature death is the future security of loved ones. Living expenses, mortgage payments, and children to raise and educate are some of those considerations. It can be a crushing burden. It doesn’t matter what financial obligations are left behind from a premature death. There is only one thing that will rectify them, and that is money. Because of this, if you want to guarantee your family does not deal with the financial devastation a premature death can generate, you need to insure there are sufficient monies to cover their needs.

You will want funds to be available for the time when the surviving spouse cannot work. There is also the survivor’s blackout period. This is when social security no longer pays the surviving spouse, because dependent children are no longer in the picture. Making sure there are funds for the surviving spouse’s retirement is also a concern. In actuality, life insurance is a way of estate building. It can generate an immediate estate, at a time when it is most needed.

Life insurance also provides living benefits, as well. Some types of permanent policies do offer a cash benefit. In addition to the death settlement, they usually accrue a cash value. Prior to the insured’s death, this cash value belongs to the policyholder. Some permanent policies permit withdrawals from the cash benefit, which can be used by the policyholder for any reason. The policyholder can also take out loans from the insurance company, and the policy’s cash value can be used as collateral.