What are the typical uses of life insurance death benefits by beneficiaries?

Beneficiaries typically use life insurance death benefits primarily to cover funeral expenses and pay off debts. This practical application reflects the immediate financial needs that arise after the death of a loved one. Funeral costs can be substantial, and having the life insurance proceeds helps alleviate this burden, allowing the family to arrange a proper service without incurring debt. Additionally, beneficiaries may face various outstanding financial obligations, such as mortgages, personal loans, or credit card debts. The death benefit can provide the necessary funds to settle these liabilities, ensuring that the deceased's financial responsibilities do not fall onto the surviving family members.

While other options may seem relevant in certain contexts, they are not the primary uses for death benefits. Investing in the stock market or accumulating cash for retirement involves a level of financial planning that typically occurs over a longer time frame, rather than addressing the immediate financial implications of a death. Similarly, purchasing additional life insurance coverage is not a direct use of death benefits; instead, it is more about future financial planning and protection. Therefore, the primary focus of beneficiaries usually revolves around addressing urgent financial needs, making the coverage of funeral expenses and debts the most typical use of life insurance death benefits.