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What Is The Primary Purpose Of Life Insurance?

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What Is The Primary Purpose Of Life Insurance?

Postby Duff » Sun Sep 17, 2017 11:10 pm

Linda,

If you're talking about life insurance on an adult with kids or spouse, C is the correct answer. Insurance is always to hedge against loss, and in this case the loss would be an income stream (paying for mortgage, cars, child care, etc...).


If you're talking about insurance on a child, usually the policies are quite small (5-10k) and are usually only for funeral expenses. While I suppose it's possible someone might go for option D, that would be pretty twisted. I think most parents get children's policies simply because they are very cheap, and insure against large financial strain (for some families) due to unexpected death of a child.


Option A would be for people who intend to buy cash value policies (Also known as whole life). These have been pretty soundly labeled as inappropriate for most people. They simply don't offer a good way to accumulate wealth when compared with other investment options like IRAs, 401ks and stock purchasing. If you want to know more about Cash Value policies vs. Term policies, I've listed a few good links to web sites that talk about that arena of insurance.


Hope that helps!
Duff
 
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What Is The Primary Purpose Of Life Insurance?

Postby Burghere » Mon Sep 18, 2017 10:02 am

wow...I guess with this collage of answers......c? Look up the definition? Nah..ask someone else!
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What Is The Primary Purpose Of Life Insurance?

Postby Brett » Tue Sep 19, 2017 11:51 am

This Site Might Help You.

RE:

what is the primary purpose of life insurance?

a. to help save money for old age

b. to pay us an income if we are injured and cant work

c. to help maintain the standard of living of those who depend on our income

d. to pay back our parents for the money they spent on us if we die
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What Is The Primary Purpose Of Life Insurance?

Postby Burne » Thu Sep 21, 2017 7:28 pm

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RE :What is the primary purpose of life insurance?

a. to help save money for old age

b. to pay us an income if we are injured and cant work

c. to help maintain the standard of living of those who depend on our income

d. to pay back our parents for the money they spent on us if we die

1 following 9 answers
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What Is The Primary Purpose Of Life Insurance?

Postby Lamond » Fri Sep 22, 2017 11:46 pm

the primary purpose for life insurance is when you die someone will be able to pay all your debts if you have enough coverage and to pay for funeral expenses. if you have a universal life insurance policy it draws interest. this type of policy sometimes comes in handy for unexpected expenses. you can borrow against you life insurance policy. when i was diagnosed with cancer and unable to work i took a loan out on my policy. but I'm paying it back, because if you die, what ever you have borrowed from you policy will be taken from the face value of the policy.
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What Is The Primary Purpose Of Life Insurance?

Postby Coilleach » Sat Sep 23, 2017 12:13 pm

People have many purposes for obtaining Life Insurance.

There is no 'one' correct answer. Each person or business has it's reason for having the policy.

Here are some answers:

Term Life

Term life insurance is affordable coverage that only lasts for a certain period of time- typically, one, 5, 10, 15, 20 or 30 years, or until a specific age. Some term life insurance policies include an option to convert to a permanent life insurance policy. Term Insurance policies can be recommend as "Mortgage Protection" for covering a mortgagor from which the benefits are intended to pay off the balance due on a mortgage upon the death of the insured. The insurance generally is made payable to the insured's beneficiary of choice. Term life insurance is typically purchased by individuals who need insurance coverage for a temporary period of time or who need a large amount of life insurance at the lowest possible cost.

Mortgage Life

A basic use for Mortgage Protection Life, so-called because many family heads purchase insurance specifically for paying off any mortgage balance outstanding at the time of their death. A life Insurance policy covering a mortgagor from which the benefits are intended to pay off the balance due on a mortgage upon the death of the insured. The insurance generally is made payable to the insured's beneficiary of choice.

Critical Illness Life

Critical Illness Insurance is an individual health policy that pays a lump sum benefit upon diagnosis of one of the covered illnesses as defined in the policy. A partial benefit may also be paid for a specific illness or specified surgical treatment as defined in the policy.


Final Expense Life

Expenses incurred at the time of a person's death including funeral costs, probate costs, current liabilities, mortgage loans and taxes. Education costs for children of the insured. Most policies are guaranteed or simplified issued and can be either term life or whole life based. No medical exam is required. And little or no underwriting is performed. Of course, your premium will depend mostly on your age.


Index Universal Life

The major difference with equity indexed universal life is the option to participate indirectly in the upward movement of a stock index without accepting the normal risk associated with investing in the stock market. The actual interest credited to a policy's cash value is determined by the annual changes of an equities index (excluding dividends). Most insurance companies use the Dow Jones Industrial Average, NASDAQ-100 Index©, and Standard & Poor's 500© indexes are 3 of the largest and most recognized indices in the world. Additionally, some companies offer a cumulative guarantee that assures a minimum effective interest rate over a given time period. Like traditional universal life insurance, Equity Indexed Universal Life offers numerous advantage including flexible premium payments, low cost permanent life insurance, tax deferred growth of cash values with borrowing ability, tax free death benefits and the ability to adjust a policy to meet specific personal or business needs.

Universal Life

Universal life policies offer the policy owner more flexibility to choose both the amount of insurance and the premium to be paid with a range of potential premiums. Premium payments are credited to a cash value account where the money earns tax-deferred interest, which may be higher than the minimum rate guaranteed in the policy. Generally, cash values can be accessed by the policy owner through policy loans and withdrawals. A universal life insurance policy can offer you the protection you're looking for in a permanent life insurance policy and the flexibility you need to adapt to a lifetime of changes. With universal life, you can design a Life Insurance policy to fit your changing needs and lifestyle.


Whole Life

A whole life insurance policy provides a guaranteed death benefit and guaranteed cash values. Part of each premium payment is applied to the policy's cash value account, which grows on a tax-deferred basis. In some cases, whole life policies may also be entitled to policy dividends, declared from the insurer's surplus, and an excess-interest whole life policy may earn an additional amount of interest after a specified period of time. Wealthy people sometimes use whole life policies as an estate-planning vehicle. They can set up an insurance trust, which applies the proceeds of the policy to their estate taxes when they die. That can save their heirs the considerable expense of settling the estate with Uncle Sam.


Joint Life

A Joint/Survivorship Life Insurance policy that insures two lives (often husband and wife), with the benefit payable upon the death of the second. These policies are often used as estate planning tools to help reduce the burden of estate taxes upon the second spouse's death. Available as either whole life or universal life, these policies feature premiums that are often less expensive than buying two separate policies.
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What Is The Primary Purpose Of Life Insurance?

Postby Guri » Sun Sep 24, 2017 2:16 am

Purpose Of Life Insurance
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What Is The Primary Purpose Of Life Insurance?

Postby Shandon » Tue Sep 26, 2017 12:29 am

The answer is "c".

Why do we need life insurance?

Life insurance can provide a secure foundation for your financial planning program. Life insurance provides much needed financial security in several situations, including:

Providing replacement income for your dependents

If people (family members, friends, etc.) depend on your income, life insurance can replace your income for them if you die prematurely. A common example of this scenario is parents with young children. This also applies to couples for which the survivor would have financial difficulties if they no longer had the income of their partner. Also, dependent adults, such as your parents, siblings or adult children who rely on you financially for support.


To pay your final expenses

Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.


Create an inheritance for your heirs

Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries.


Pay federal and state Death Taxes

Life insurance benefits can pay estate taxes so that your heirs will not have to liquidate other assets or take a smaller inheritance. Changes in the federal ?death? tax rules between now and January 1, 2011 will likely lessen the impact of this tax on some people, but some states are offsetting those federal decreases with increases in their state-level ?death? taxes.


Charitable Contributions

By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy?s premiums.


Create Savings for your Spouse or Family Members

Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner?s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of "forced" savings plan. Furthermore, the interest credited is tax deferred (and tax exempt if the money is paid as a death claim).

There are many reasons why we need life insurance. It?s important to consider your own personal situation. Decide why you need life insurance and who you want to provide for with your policy.


I hope that helps!
Shandon
 
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What Is The Primary Purpose Of Life Insurance?

Postby tassa » Tue Sep 26, 2017 4:53 am

The answer is C.
Therefore you should buy term life insurance.(no cash value build up) It is pure insurance.
You get the most insurance for the premium you pay.
It is protection for those who are dependent on you.
tassa
 
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What Is The Primary Purpose Of Life Insurance?

Postby Torio » Tue Sep 26, 2017 7:57 am

The answer is C

Insurance is to protect you from the loss that you cant see coming

Dying too soon
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