What's the Purpose of Life Insurance?

Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Life Insurance and other Financial Planning topics.

What can life insurance be used for?

What's the Purpose of Life Insurance?

The reasons to have a life insurance policy are different for every individual. Here are some of the most common reasons:

  1. Burial expenses: Life insurance policies can be purchased as burial policies so that the death benefit can be paid directly to a funeral home for the purpose of burial and funeral expenses.
  2. Debt repayment: If you leave your spouse with a mortgage, car payments, and other bills that once required your income to pay, then a life insurance policy can help them pay these debts off after your death and after the loss of your income.
  3. Salary continuance: Most families need the income of each working spouse in order to live comfortably. When one spouse dies, that can put the family in dire financial straits, but a life insurance death benefit can provide the life support they need.
  4. Estate tax issues: Some large estates may face estate tax consequences after the death of the head of the household. A life insurance policy death benefit (which is federal estate tax exempt) can be used to pay off those taxes to help keep the family's accumulated wealth in the same investments.



Nobody has commented on this tip yet. Be the first.


URL: (optional)


Not finding the advice and tips you need on this Financial Planning Tip Site? Request a Tip Now!

Guru Spotlight
Tammi Reynolds