Whether it’s to leave behind a legacy for children or grandchildren or to spare loved ones from the financial burden caused by a sudden death, the money received because of a life insurance policy can be life changing.
Being the beneficiary of a life insurance policy can come with many mixed emotions. On one hand, you are grieving the loss of a loved one and maybe even feel a little guilty for receiving the money because of the circumstance. On the other hand, you may feel a sense of relief because you now have the opportunity to build a strong, successful and financially secure future.
If you suddenly find yourself the beneficiary of a life insurance policy, here are some things to consider that will help you make smart financial decisions.
Don’t Be Impulsive
Receiving a large sum of money from a life insurance policy can be overwhelming. So, it’s important to take a step back and give yourself time to review your current financial situation before you make any significant decisions. It’s a good idea to find a trusted financial advisor if you don’t already have one to help you build a financial plan so that the newfound windfall is used wisely.
Review Your Current Financial Obligations
Life insurance is purchased so that those left behind are not burdened financially. It’s also used to leave a legacy or inheritance to loved-ones. If you are the beneficiary of a life insurance policy, consider making a list of all the outstanding debt you currently have like your mortgage balance, car payments or school loans. This will help you determine what could possibly be paid off, now that you have an opportunity to do so. Relieving yourself of large debt will free up your existing income so it can be used for more important things.
Determine Your Future Financial Goals
In addition to reviewing your current financial obligations, you should also re-evaluate what your future goals are because receiving an inheritance can help turn those goals into a reality. Whether it’s putting more money toward a retirement fund or into a smart savings account to build up a liberty fund, money received from a life insurance policy can help financially secure your future.
Review Your Current Life Insurance Needs
Since your financial circumstances may change for the better after receiving a payout from a life insurance policy, it’s a good idea to reevaluate your life insurance coverage. With some extra cash on hand, you now have the ability to purchase more life insurance that will allow you to leave a legacy behind for your loved ones.
Giving to Charity
Receiving an inheritance from a life insurance policy is sure to have a positive impact on your life so why not do the same for someone else. Making a donation to a favorite charity is another way to put some of your windfall to good use. No matter how large or small the donation may be, paying it forward via a charity is great way to help others and share the legacy that was left for you.
Being the beneficiary of a life insurance policy is a gift that was left behind by someone who cared about you dearly. It can open doors for you that may not have been opened otherwise. So be smart about managing the money you have received to secure your future.
You only get one chance to make the most of this windfall - don’t waste it!
Alison Robb is the Digital Marketing Manager at Vantis Life Insurance Company. She has a Marketing Communications degree from Western New England University and over 16 years of experience in the life insurance industry. She is passionate about life insurance and the important role it plays in any financial plan.