Can Social Security survivor benefits replace life insurance?

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Social Security might protect your family when you die, but will that be enough?


Key points

  • Social Security is designed to help families who experience a loss of income after someone dies.
  • While these perks can be helpful, you should always consider putting some extra protection in place.

Many people are familiar with Social Security as part of retirement. But the program doesn’t just pay benefits to seniors. Social Security also provides income to the families of eligible workers who die.

As you work and pay taxes to Social Security, you earn credits for future benefits you may be entitled to in retirement. But if you die, your family may also be entitled to survivors’ benefits.

The amount your family will be entitled to in the form of survivors’ benefits will depend on what you have earned during your lifetime. And those benefits can look very different from family to family. As a general rule, however, your surviving spouse and your children up to a certain age are entitled to some Social Security income in the event of death.

Given this, you might assume that buying life insurance is not necessary. After all, if Social Security will take care of your family in your absence, why bother paying those premiums? But while Social Security survivor benefits can help your family stay afloat in the event of your death, they don’t have to replace a separate policy you have in place.

Give your loved ones the protection they need

If you die at a relatively young age and didn’t have a particularly high income, your loved ones may not end up with much income in the form of Social Security survivor benefits. That’s reason enough to take out a separate life insurance policy.

You should also know that Social Security survivor benefits are paid over time on a monthly basis. This is good because your loved ones may need continued access to income in the event of your death.

But Social Security won’t pay a large lump sum death benefit like a life insurance policy typically would. In fact, Social Security will only make a one-time payment of $225 if you die, provided your spouse and/or children meet certain criteria.

If your family has to pay funeral expenses, this $225 payment will not be enough to cover those costs. After all, the average casket alone can cost upwards of $2,000, and depending on which service your family chooses, they could easily end up with an approximate bill of $10,000.

Also, if you die and leave your spouse with a mortgage and other obligations that their income cannot cover, the Social Security survivor benefits they receive may not be enough to meet those payments. But if you buy life insurance that pays a $250,000 death benefit, you could put your family in a much stronger position to not only cover funeral expenses, but also settle any outstanding debts.

Don’t depend too much on Social Security

Just as workers are urged to save for retirement and not rely solely on Social Security for income in their retirement years, you should also consider setting up life insurance to protect your family in the event of your death. premature. Although Social Security can help by paying survivors’ benefits, these payments may be insufficient, leaving your family in a serious financial bind that life insurance can help avoid.

Life insurance protection for you and your family

While many varieties of insurance coverage are designed to help protect a person’s family and assets, life insurance is an essential type of protection. The right life insurance can help protect the people who depend on you most if you die. Choosing the right life insurance policy is essential to ensure adequate protection for your loved ones. We’ve sorted through the different options to bring you our picks for the best life insurance policies available today.

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