30 Uses of Life Insurance

Keith HazelbakerBy Keith Hazelbaker, CFP®

Life insurance is an important financial tool because it can be used to address many different concerns and objectives.

Personal needs

  1. Pay off car loans, credit cards and other debts
  2. Pay off or reduce your home mortgage
  3. Fund burial and other final expenses
  4. Replace income lost due the death of a wage earner
  5. Fund the costs to replace domestic services of a stay-at-home spouse or caregiver
  6. Create an education fund
  7. Protect future insurability
  8. Ensure a retirement income “completion fund”
  9. Enhance an estate to provide for the children of a prior marriage
  10. Satisfy divorce-related obligations such as alimony or child support
  11. Create a fund to provide care for a loved one with special needs

    12. Estate and charitable needs

  12. Pay legal and administrative costs incurred at the insured’s death
  13. Provide a source of liquidity to pay state and/or federal “death taxes”
  14. Mitigate the impact taxes can have on assets owned in trust
  15. Supplement any income shortfall of a total return or income trust
  16. Replace loss due to IRD tax incurred by annuities, IRAs and qualified plan assets
  17. Diminish the impact of marital deduction limitations of a surviving resident noncitizen spouse
  18. Increase the value of transfers of generation-skipping, annual exclusion and exemption gift amounts
  19. Freeze the value of a highly appreciated estate asset received by a surviving heir
  20. Create a fund to produce an income stream to non-charitable beneficiaries during the term of a testamentary charitable lead trust
  21. Leave a charitable legacy
  22. Replace wealth left to a charity
  23. Equalize inheritances between business heirs and non-business heirs

    24. Business needs

  24. Collateralize a business loan
  25. Fund a buy-sell agreement
  26. Stabilize a business at the death of a key employee or owner
  27. Fund post-retirement health care costs
  28. Offset a loss to a business caused by the death of a key employee
  29. Establish a fund to retain key employees
  30. Facilitate an ESOP repurchase obligation

If any of these needs apply to you or your family members, please call North American Life Plans at 1-888-362-1214 for a free consultation by an TRTA-endorsed representative.