What is the purpose of life insurance?

Answer 1

Life insurance serves several purposes. A sufficient amount of it can provide for your family and or loved ones after your demise. It can also help to pay for your funeral costs. It can be part of your estate or it can be in place of an estate for those who have no estate to leave behind. If the policy is a whole life as opposed to term, it will build up cash value which can be borrowed against, or even cashed in if need be. There are different payment options, it can be left as a lump sum or payable in a monthly annunity. It can also be payable to a heirarchy of beneficiaries such as a primary, a contigent benificiary and so on. It is also quite possible that it is exempt from certain taxes and creditors claims, but I'm not certain on this, can anyone else answer this one? Also, many policies include an accelerated death benefit that can be used in the event of a terminal illness or the need for assisted living and or nursing home care. You can also use whole life or universal life to allow you to have a more prosperous retirement. Ask your insurance agent about how whole life insurance can allow you to get the maximum benefit from your pension. In order for this to work you have to purchase the whole life insurance at an early age.