For what can life insurance proceeds be used by beneficiaries?

Life insurance proceeds are designed to provide financial support to beneficiaries after the policyholder's death. The correct answer highlights that these funds can be utilized for a variety of essential purposes, such as debt repayment, education expenses, and income replacement.

When a policyholder passes away, beneficiaries may face various financial challenges. For instance, they may need to cover outstanding debts like credit cards, personal loans, or the balance on a mortgage, ensuring that they aren't left with financial burdens during a vulnerable time. Additionally, funds can be directed toward educational expenses, such as college tuition for children or dependents who may need continued support. The income replacement aspect is crucial because the loss of a primary earner can significantly impact a household's financial stability; life insurance can provide a necessary safety net, allowing beneficiaries to maintain their standard of living without the deceased's income.

The other choices are limited in scope and do not reflect the broad utility of life insurance proceeds. For example, while funeral expenses are an important consideration, they represent just a fraction of the potential uses of life insurance benefits. Similarly, while investing in stocks and bonds could be a viable option for some, it is not a primary purpose of life insurance proceeds in immediate financial planning. Lastly, focusing solely on mortgage