What is life insurance?
Life Insurance provides a payment to your survivors at the time of your death. When a person dies, there are many expenses that need to be paid. These expenses may include such items as funeral costs, burial expense, current bills, and estate taxes. In the case of a premature death, the expenses could also include continuing financial needs of their survivors, such as family living expenses, mortgage payments, long-term debt, and educational expenses. A life insurance policys primary function is to provide for these costs and expenses. The goal, of course, should be to have a sufficient amount of life insurance to cover all of these costs and a reasonable amount left over to offset unforeseen future expenses.
Life insurance is a contract that binds an insurance company to compensate a beneficiary in the event of the death of the insured person. If the insured person dies, the insurance company will pay a cash benefit to the beneficiary (typically a family member). Life insurance is typically used to protect a family against the economic hardship that could result from the death of a primary income-earner. (Note: If a family has more than one income-earner, it is often prudent to get a life insurance policy for each income-earner.
When a person dies, there are many expenses that will need to be paid. These expenses may include such items as funeral costs, burial expense, current bills, and estate taxes. In addition, there may be financial needs the insured would have met if they had remained alive, including family living expenses, mortgage payments, long-term debt, and college costs for children. The Primary Function of a Life Insurance Policy is to provide, upon death of the insured, an amount sufficient to pay for any or all of the preceding costs and expenses. Which expenses or costs are to be provided for, and how much money will be needed is entirely up to the insured.
Life Insurance is a contract between you and a life insurance company, which provides your beneficiary with a pre-determined amount in case of your death during the contract term. Buying insurance is extremely useful if you are the principal earning member in the family. In case of your unfortunate premature demise, your family can remain financially secure because of the life insurance policy that you have purchased.
