What can death benefit proceeds from a life insurance policy be used for?

The death benefit proceeds from a life insurance policy are primarily intended to provide financial support to the beneficiaries after the insured's passing. These funds can be utilized for various critical needs, among which are covering final expenses, funeral costs, and outstanding debts. This helps ensure that the beneficiaries are not burdened by the financial obligations that may arise from the insured's death, allowing them to focus on grieving and transitioning after the loss.

By addressing final expenses and settling debts, the life insurance benefit ensures that the family's financial stability is somewhat preserved, and important costs related to the administration of the insured's estate and end-of-life arrangements are taken care of. This purpose aligns with the fundamental intent of life insurance, which is to provide security and financial peace of mind to surivors during a difficult time.

The other options presented are not typically aligned with the direct use of death benefit proceeds. For example, using the funds to pay for life insurance premiums or covering retirement income would not be common or recommended practices for life insurance payouts. Furthermore, while investing in real estate may be a strategic use of funds, it doesn't reflect the immediate and pressing needs that arise at the time of a death, which are better addressed by using the proceeds for final expenses and outstanding debts.