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What Should You Use Life Insurance Money For Beneficiaries

In previous posts I have been talking about life insurance benefits for the victims of the Katrina Hurricane but as well for anyone else who receives it. Generally when you take out a life insurance policy, you have to designated at least one beneficiary to whom the money will be given should the policy holder die. You can make the life insurance policy beneficiary any other person, but most commonly is designated to children or immediate family. Even though you have to lose a loved one to collect a life insurance policy, I get a sense that some people would get giddy and irrational about receiving $250,000 or $500,000 in cash from a life insurance policy all at once. Here are things you SHOULDN'T spend all of your life insurance benefit money on: ? Gambling at the casino. Poker, Blackjack and slot machines was not what the money was intended for. ? Over expensive cars. Don't buy an expensive Porsche even though you can afford it. ? Gadgets such as DVD's, MP3 players, DV video players, 52" TV's ? High risk and untested business ventures I can just imagine a person with little financial skill or wisdom burning through $250,000 (quarter of a million dollars) easily by gambling and buying trinkets and toys that go down in value. Although the person who died would have wanted you to be happy, they probably would have wanted you to use the money for income replacement and to secure your future financially. They probably would have wanted you to use the money to secure your family's and your heirs' future. WHAT TO DO WITH LIFE INSURANCE MONEY? Depending on your age, financial situation, family situation, there are different ways to use life insurance benefit money that will give you some long lasting value. If you're young and are currently renting, you may want to buy a good quality house. As well if you haven't done so already, you may want to purchase a university or college education. If you're already more established, you may want to pay off your existing mortgage and all of your credit cards and lines of credit. The whole idea is to get yourself in a financially secure position so that you're not constantly worrying about money. HERE'S WHAT I RECOMMEND If you have received or are going to receive a huge amount of money such as a life insurance benefits amount, get out a pad of paper and write down all of the things you would spend money on. Make two lists: 1) The important, boring, unexciting long term list. This is the list that secures your financial future. It buys you a house and college education. It puts some rainy day money away for you. These are the things that will set you up for the rest of your life. 2) The exciting gadget list. These are the DVD player, DV camera digital camera, Big TV and all stuff you've been drooling over. The trips and gambling and all the fun stuff you've been dying to do. Set aside a LITTLE money for these items. It's not good to completely deprive yourself. However make sure that you take care of the fundamentals first. Ultimately you'll be glad that you did some future planning as it will save you many years of financial head ache. If you find yourself the beneficiary of a life insurance policy, please do the responsible thing and spend the money wisely. By Monty Loree - Financial Maturity blog - Topic - Life Insurance Benefit Money. Spend it wisely, don't spend it foolishly.

Articles from December 2006
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