Why Do Individuals and Businesses Buy Life Insurance Policies ?

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There are many individual and business reasons to buy life insurance. The basic reason is simple - only life insurance provides a contractually specified amount of money at the death of an individual insured by a life insurance policy. Some of the more common reasons for personal and business life insurance ownership might include:

Why Do Individuals Buy Life Insurance ?

Paying Funeral Expenses - Life insurance proceeds can be used to guarantee that there will be adequate money available to meet all funeral and burial expenses.

Eliminating Personal / Family Debts - Personal bills, credit card debt, student loans, and personal notes can be covered by life insurance proceeds in the event of an individual's premature death.

Mortgage Protection - The proceeds of a life insurance policy can pay off the balance of a mortgage or provide predictable income stream to meet monthly mortgage or rent payments.

Paying Education Expenses - Life insurance proceeds can be used to guarantee that all education costs of the insured's children and / or spouse are provided for.

Replacing Lost Income - life insurance proceeds can provide a guaranteed amount of capital adequate to fund future income needs so that surviving family members are able to maintain a predictable standard of living.

Taxes - Federal estate and state inheritance taxes can be from life insurance proceeds to preserve the value of an estate.

Donations/Gifts - Proceeds from a life insurance policy can be used to fund a donation to a charity or leave a gift to a family member.

Why Do Businesses Buy Life Insurance ?

Key-Person Life Insurance - A life insurance policy can be used to protect a business from the loss of income and profits that may be caused by the death of a key employee.

Business Continuation Life Insurance Coverage - Life insurance can be used to fund a buy/sell agreement or stock redemption plan thus allowing a partner or group of employees to buy the business interest of a deceased partner or stockholder.

Paying Business Loans - Life insurance protection on a key employee or a business owner can be used to pay off the debts of a business in the event of that individual's death.

To Fund Employee Benefits - Group Life insurance protection for employees is commonly included in a company employee benefits plan.