6 Expenses Beneficiaries Can Use Your Life Insurance Death Benefit For

Life insurance can come in many forms, each with varying features, costs, and other factors. However, at its core, life insurance can provide a death benefit payout that your beneficiaries can typically use for almost anything.

If you’re wondering, “How does life insurance work?” this article is for you. Read on to explore a few ways that beneficiaries can utilize the death benefit.

1. End-of-life costs 

Funerals alone can cost a significant amount of money, and that doesn’t include additional expenses such as medical bills, travel, and time off work for the funeral and mourning.

Fortunately, beneficiaries can use the death benefit to help cover these costs or any debt incurred to manage them. As a result, beneficiaries can grieve without the added burden of financial stress.

2. Living expenses 

Usually, a primary reason for obtaining life insurance is to help provide financial stability, especially if you are the sole or major breadwinner in the household. Without financial support, your loved ones could struggle to cover living expenses.

A death benefit may alleviate these concerns. Your loved ones can save the payout in an appropriate savings account, making regular transfers to help cover living expenses while letting the remaining funds earn interest.

3. Healthcare costs Employer-sponsored health insurance generally offers families a reasonable way to help provide coverage, including supplemental policies such as dental and vision insurance.

If you have employer insurance and pass away, your loved ones may need to seek new health coverage. Additionally, if you were the primary earner in the family, healthcare costs might become more difficult to manage.

A death benefit can help bridge this gap. Beneficiaries can use it to help pay health insurance premiums and cover medical costs that insurance does not cover.

4. Outstanding debts 

You might leave behind debts like a mortgage, which can be challenging for your loved ones to manage if they inherit the home. The death benefit can help provide funds to cover monthly payments or even pay off the mortgage entirely, allowing your family to own the home outright.

Another example is consumer debt, such as credit card balances. Your estate might be used to help pay these, potentially reducing the wealth your heirs receive. A life insurance payout can assist in settling these debts, ensuring your loved ones inherit a larger estate.

5. College costs 

College expenses can be substantial. Without financial security, your family might struggle to save as much for these costs, forcing your children to take on larger amounts of student debt.

A life insurance death benefit can change this scenario. If you pass away, your beneficiaries can save the death benefit in appropriate accounts, such as savings accounts or 529 plans.1 These funds can then be used for costs like:

• Tuition and fees

• Room and board

• Textbooks

• School supplies

6. Retirement savings 

Retirement is usually one of the most significant financial goals many people strive for, requiring years of consistent saving and, in some cases, careful investment management.

Passing away can slow down retirement savings for your surviving spouse or partner. A death benefit can help compensate for this by providing a large sum to save for the future. They can then hire a financial advisor to assist in investing the money wisely, balancing returns and stability.

Help loved ones cover these expenses

When a loved one passes away, it can be an emotional shock for their loved ones. It can also lead to financial strain, especially if the deceased had been the primary income earner in the household.

A life insurance death benefit can provide financial stability, helping beneficiaries cover end-of-life costs, living expenses, healthcare, outstanding debts, college savings, and retirement funds. The best part is that your loved ones can allocate the death benefit across several of these needs if necessary.

The key is knowing how much coverage to get. Generally, a good starting point is ten times your annual income. However, it’s important to consider your budget and goals and consult with a financial advisor to arrive at an accurate death benefit amount.

1 Investopedia – 529 Plan: What It Is, How It Works, Pros and Cons. Updated Nov. 22, 2024. https://www.investopedia.com/terms/1/529plan.asp Accessed Apr. 2, 2025. 

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.

Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.

Aflac life plans – A68000 series: Term Life Policies: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68200, A68300 & A68400. In New York, Policies NY68200, NY68300 and NY68400. Whole Life Policies: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368100. In Delaware, Policy A68100. In New York, Policy NYR68100. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Not available in Delaware. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.

Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY, VA or VT. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.

Aflac WWHQ | 1932 Wynnton Road | Columbus, GA 31999

Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211

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