Top 4 Reasons People Buy Life Insurance

Always, the right policy can support family members, cover funeral expenses, save property or business from taxes, act as savings.

[Unlike other types of insurance, life insurance doesn't usually benefit the person who pays for it. Instead, term or whole life insurance helps the people who are left behind – a spouse, children, or other dependents - when the insured party dies. ]

There are many reasons a person might invest in this type of insurance, but most of them boil down to the following four. 

Life Insurance to Support Family and Dependents

The number one reason that people buy insurance is to safeguard their families' finances for the future – even if they should happen to die. Life insurance is intended to pay out enough money to support the family even if the deceased person was the major breadwinner – paying for living expenses, mortgage payments, the possibility of medical costs, and even children's college tuition.

Life Insurance to Protect a Business   

This type of insurance protects the business from the loss of expertise caused by the death; in the latter case, the insurance is meant to offset the estate taxes that could otherwise force family to sell the business at a loss.

Life Insurance as a Retirement Investment

This kind of life insurance may sound promising, but experts agree that it is almost always a waste of money. It's usually possible to invest the same dollar amount elsewhere for a higher rate of return. What's more, these policies often charge a premium for offering both an insurance plan and an investment, while only paying out one or the other – not the wisest way to save or invest money.

Life Insurance to Pay Funeral and Burial Expenses

Even someone with no family or dependents might purchase a small life insurance policy to pay for the expense of his or her funeral, burial, and estate taxes – costly procedures that can cut into any money a person might otherwise leave to friends or to charity. Someone with a family is even less likely to leave these expenses to chance.