If you’ve just lost your spouse, you’re dealing with one of the most difficult times of your life while also trying to manage your household. We typically recommend holding off on major decisions, but life insurance proceeds often require quicker action.
Many families purchase life insurance to offset a loss of income. These policies can be substantial, and may be the largest asset you’ve ever managed. Here are three of the most common uses.
1. Debt and Liabilities
In many cases, life insurance is purchased to help pay off a mortgage or other liabilities. Paying off your mortgage can be a huge relief, especially when relying on a single income stream.
2. Education Costs
Another common reason is ensuring children’s or grandchildren’s education costs are covered. A 529 account is often a great vehicle, but your financial advisor can guide you to the most tax-efficient structure for your situation.
3. Living Expenses
You may also need proceeds for everyday living expenses. Depending on the policy size and your circumstances, investing the proceeds and establishing a tax-efficient withdrawal strategy may be appropriate.
Every situation is unique. Working closely with a financial advisor ensures the strategy fits your full picture and brings comfort that the decisions you’re making are truly in your best interest.