What is a Life Insurance Lump Sum?
Nobody likes to think about the worst-case scenarios in life, but it's important for us to be prepared all the same. Having a life insurance policy is a wise decision for this very reason. Life insurance pays out a lump sum upon your passing, serving as a safety net for your family as they navigate life without your income.
Here's a breakdown of the most beneficial ways a life insurance lump sum can support your family:
FUNERAL EXPENSES
In Ireland, we honour our loved ones with a dignified send-off, but funerals come with a hefty price tag.
Since the abolition of the bereavement grant in 2013, the full cost of funeral expenses falls on the family, unless the death must have resulted from:
An accident at work,
An accident while travelling directly to or from work
An occupational disease. More about Special Funeral Grant here.
With the average cost of a funeral in Ireland being around €5,000, a life insurance lump sum can alleviate the financial burden on your family by covering these costs.
TO REPLACE INCOME
The loss of an income can significantly impact a family, particularly if children are still dependent.
The lump sum from a life insurance policy can be saved and used by your family as a monthly income substitute.
It's not only the loss of income from a working spouse that can strain family finances; the role of a stay-at-home parent, with duties equivalent to €40,000 a year in child-minding, cleaning, and cooking, is just as crucial.
The death of a stay-at-home parent can affect the family's financial situation as severely as the loss of a working spouse.
PAYING OFF DEBT
The loss of income can make credit card bills, car loans, and credit union loans more daunting. A life insurance lump sum can offer your family something invaluable - peace of mind, by allowing them to settle outstanding debts. To learn more about how to manage debt and loans after someone dies, go here.
A VARIETY OF EXPENSES
A life insurance lump sum can cater to a wide range of needs for your family - from short-term necessities like monthly bills and groceries, to medium-term costs such as education, home repairs, car replacements, or weddings, and even long-term commitments like mortgage repayments, pensions, and support for your children's first home or grandchildren's education costs.
TAX AND FEES ON LUMP SUM
One of the advantages of a life insurance lump sum is its financial efficiency; there's no tax deducted from the payout, nor are there any fees associated with receiving the lump sum, making it a straightforward and beneficial support system for your family.
Life insurance is more than just a policy; it's a pledge to protect your loved ones even when you're not there. With AOR Insurances, you can ensure that this pledge is honoured with dignity, support, and financial security.