Surprising things life insurance can cover

If you're in the market for life insurance or already have a policy, you're probably familiar with the idea that life insurance coverage can help provide financial protection for you and your loved ones. But perhaps life insurance covers more than you assume.

It's not always just about leaving your family with a large lump sum and hoping for the best. While many policies provide flexibility in terms of how your beneficiaries can use the money they get from your life insurance policy, having some specific use cases in mind can help you envision whether life insurance would be worth it for you and your family.

If you're in the market for life insurance then start by getting a free online price estimate now so you know exactly what to expect.

Surprising things life insurance cover

In many cases, life insurance covers costs like:

Debt

If you're worried about managing debt, like your mortgage or car loans, then life insurance could potentially help.

You might think your family would have to move if you were to pass away, for example, due to not being able to afford the mortgage on your home. But if they receive money from a life insurance policy, then your spouse, for instance, could pay off the remaining mortgage and continue living in the same home.

Think about what your current debt obligations look like, as well as whether your spouse and/or others you care about would be responsible for your debt (generally if they cosigned loans). Then, consider if life insurance coverage could help ease that responsibility. If you have an existing policy, you also might decide to increase coverage if you take on more liabilities.

You can easily get a free online price quote now to see how much life insurance you're eligible for.

End-of-life expenses

Another potential benefit of life insurance is that it could cover end-of-life expenses. For example, some life insurance providers offer options like burial insurance or final expense insurance, which are generally more targeted forms of whole life insurance.

These policies can help cover the costs of a funeral or other final arrangements, such as by paying out directly to a funeral director or giving your family a lump sum to handle costs like cremation expenses.

Or, you might choose a more general policy that pays out a larger lump sum, and you can tell your family ahead of time that you'd like them to earmark some of those funds to cover end-of-life expenses. That could help them avoid worrying about paying for final expenses.

Also, life insurance can cover things like medical costs as life comes to an end. If you have a critical illness rider, for example, you might be able to receive some of your death benefit while still alive to help manage a critical illness.

Lost monthly income

You probably already know that life insurance can protect your family financially, such as by paying out a death benefit after you pass away. But what you might not know is that life insurance claims do not have to result in lump sum payouts. In some cases, you may be able to instead receive installment payments that help replace your monthly income.

If both you and your spouse work, but you then pass away while your kids are still young, for example, that might leave your spouse in a difficult financial situation.  If they can receive monthly payments, however, that could make it easier to manage regular bills like mortgage payments and utilities. That income consistency can be particularly helpful as your family navigates life without you.

Some insurance companies have claims options that allow for regular installments for a given number of years, or there might be options such as paying your beneficiary for the rest of their life.

Also, if you wind up in a situation where you lose income during your lifetime, you might have more options than you think to manage to pay premiums to your insurance provider. For example, a waiver of a premium rider might enable you to stop making monthly payments for premiums if you have a qualifying disability, making it easier to manage lost income during this period.

The bottom line

As these examples show, life insurance can cover a wide range of costs that can ease pressure on you and your family. And there are many life insurance types to consider, such as whole life insurance vs. term life insurance, so take some time to see how different policies align with what you're looking for.

You can also look at various riders that enable you to adjust life insurance to help cover more scenarios. In the end, you might find life insurance protection where the cost of the policy seems worth it based on your circumstances.

Start reviewing life insurance providers here or via the table below to find the right protection for you and your loved ones.