Life insurance was invented to protect family members and business associates from financial exposure at the untimely death of the wage earners or partners to indemnify their beneficiaries from the proceeds of the policy. Those proceeds may have tax advantaged features depending on the ownership of the policy.
The purpose of insurance, in general, is to provide economic protection against losses that may be incurred due to a chance happening or event. An insurance policy provides this protection by accumulating funds to meet those uncertain losses.
Human life value, which is what Life insurance protects, is what a person would earn, or what it would cost to replace the services of that person, in the future. The primary purpose of life insurance is to conserve and protect human life value so that others will not be too negatively affected economically in the event of the insured person's death.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
What is the primary purpose of life insurance? What ever the policy owner wants it to be. Every purpose can be different. While dating myself a little bit by saying this.. Life insurance is the silly putty of financial products. It is a product that has many forms and can be used in many ways. One person's primary purpose may be someone else's 5th choice.
It's not unheard of to start a first time client meeting with the question "what do you want your life insurance to do?"
Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah
Or, in other words, to provide an income-tax-free lump sum of money to the beneficiary upon the death of the insured.
I'm supposed to provide at least 50 words to make the answer acceptable, so I'll just add that there may be other useful riders on a life policy, but keep the planning focus on the face amount or "death benefit".
I tend to agree with Larry. Life Insurance primary intention is to provide a tax-free death benefit to beneficiaries upon death of the insured. You need to understand this part of Life Insurance before looking at all the benefits provided.
Life Insurance can provide supplemental income to meet any need if funded correctly.
Life Insurance is one of the only vehicles that can provide tax-free income, a tax-free death benefit!
Life Insurance is used by businesses for buy-sell situations, key employee needs, executive retirement plans, etc.
When the Life Insurance is funded correctly, which by the way, it is my experience that most agents do not do, it will become a true asset designed to meet your future needs.
Regional Marketing Director, Capital Choice Financial Group,
Life insurance's only purpose is to provide an adequate death benefit to pay off debt, replace a full income, pay off mortgage, and pay for college education for the kids. The need for life insurance is temporary and only there until these needs are satisfied. In the later years, debt is down, mortgage paid, and retirement is looming the need for life insurance is nearly zero.
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Human life value, which is what Life insurance protects, is what a person would earn, or what it would cost to replace the services of that person, in the future. The primary purpose of life insurance is to conserve and protect human life value so that others will not be too negatively affected economically in the event of the insured person's death.
It's not unheard of to start a first time client meeting with the question "what do you want your life insurance to do?"
I'm supposed to provide at least 50 words to make the answer acceptable, so I'll just add that there may be other useful riders on a life policy, but keep the planning focus on the face amount or "death benefit".
Life Insurance can provide supplemental income to meet any need if funded correctly.
Life Insurance is one of the only vehicles that can provide tax-free income, a tax-free death benefit!
Life Insurance is used by businesses for buy-sell situations, key employee needs, executive retirement plans, etc.
When the Life Insurance is funded correctly, which by the way, it is my experience that most agents do not do, it will become a true asset designed to meet your future needs.