How would I use life insurance?

• Income replacement
  

  The most common reason for buying life insurance is to replace the income lost when you die. For example, when you die, and your paychecks stop, the life insurance proceeds can be used to continue to support your family members. Such support is needed to pay bills, pay for college education, etc.

• Debt payments  

  Another common use of life insurance proceeds is to pay off debts. For example, mortgages, car loans, medical bills, and credit card debts are often left unpaid when someone dies. These obligations must be paid from the assets left behind. This can exhaust the resources that your family needs. Life insurance can be used to pay off debts, leaving your other assets for your family to use.

• Creation of a liquid asset
  

  When you die, you may leave some liquid assets (such as cash, CDs, and savings bonds), and some non-liquid assets (such as real estate, an automobile, and stocks). Your liquid assets may not be enough to pay all the debts that you leave behind, plus all the expenses that arise because of your death (such as funeral expenses and estate taxes). Your non-liquid assets may have to be sold in order to meet these obligations when they come due. This may cause a financial loss if the assets must be sold cheaply in order to get the money on time. Life insurance proceeds are available almost immediately upon your death and can help you avert this situation.

• Estate creation
  

  Life insurance creates an estate for your heirs. After your debts and expenses are paid, there may not be much left over for your family. Life insurance can automatically provide assets for them after your death.

• Charitable giving
  

  Life insurance is a great way to give to charity when you die. You may have always had a great philanthropic desire, but not the means to make it a reality. Life insurance can do that for you.