Things to consider after you receive a life insurance payout
A lump sum life insurance benefit payout can provide a great deal of financial relief if you lose a loved one, but it can also feel overwhelming at a time when you’re grieving.
It’s important to use your payout wisely so you and your dependents are set up for the future. Here are a few ideas to help you make informed decisions with the benefit you receive.
Take your time
When you’re grieving, you may not be thinking straight. Making big financial decisions at this time could be risky. Unless you have immediate needs to cover, it may be a good idea to allow some time to pass. That way, you can do your research and plan how you can best use the money.
Replace lost income
If the departed was the main breadwinner in your household, the payout could help you keep up with regular expenses such as mortgage repayments, food, utilities, school fees and other daily living costs. Consider reviewing these expenses to help set a budget.
Pay off your debts
High-interest debts can erode your income and savings over time. If you have the money to spare from your benefit payout, it might be worth clearing debts such as credit card balances or personal loans to ease the financial pressure.
Bulk up your emergency fund
It’s generally recommended to have 3-6 months’ worth of salary in an emergency fund so that if anything happens to you, your household can keep going. A life insurance benefit may provide a good opportunity for you to bulk up this account and create a financial buffer for unexpected expenses or loss of income.
Consider your future
Could your retirement fund do with a top-up? Do you have children wanting to study further or elderly parents you’ll need to care for? This may be a good moment to determine what funds you will need to help you and your loved ones live comfortably into the future and to set aside some of your benefit for these expenses.
Invest your benefit
To earn compound interest on your lump sum, it may be worth investing leftover funds into a diversified portfolio. If you choose to go this route, it’s important to speak to an expert who can guide you in making smart investments. Whatever your lifestyle and needs are, the JBS Financial Team can help you create a plan for your benefit that will help you use it to your best advantage.
We can also help you put financial protections in place to ensure your present and future are financially secure. Contact our team today.
Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.
Source: TAL