What is the Purpose of Life Insurance?
The main purpose of life insurance is for protection – the creation of an instant estate to meet your survivor’s needs. Because families depend on cash for day-to-day survival, there is a real need for protection from financial disaster if the source of cash is removed. (1)
One of the other purposes of life insurance is to cover a person’s exposure to risk. The risk of loss through varying means, primarily the loss of income! Then, transferring that risk to an insuring organization taking the pressure off of your family.
When buying life insurance, a family should develop a plan and select policies that fit their particular financial needs. They should use life insurance to provide for financial needs that are not met in other ways.
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(1) Life Insurance, Purposes and Basic policies: Edward J. Metzen