Life Insurance

LIFE INSURANCE

Life Insurance

Why Buy Life Insurance?

Life insurance plays a very important part of the establishment of financial planning objectives.


In the determination of a financial plan, the risks involved in attempting to achieve the objectives must be carefully considered.  In this sense, life insurance becomes a tool for risk management because life insurance guarantees that an individual’s family, dependents or business will not have to suffer the risk of  financial loss in case of premature death of the individual.


In accumulating wealth, the savings element of life insurance is an important tool in risk management.  The costs of education continues to climb, and a premature death without insurance can cause a dependent child to lose the advantage of a college education, or the privilege of attending the college of their choice.


In order to enjoy retirement, life insurance now offers a wide variety of fixed-value and variable investments which can assist in building up the retirement fund.  After retirement, fixed or variable policies can provide tax-deferred investments not available in other investments.


Because of the tax deferral privileges of life insurance, taxes are minimized.  More than just being a vehicle that pays a sum in case of premature death, life insurance is purchased usually for one (or more) of the following reasons:


> Replacing income lost by death of the wage-earner.

> Paying off an outstanding debt, such as home mortgage or auto payment, in case of the death of the person responsible for the debt.

> Creating savings that can be used for educational purposes or emergency fund, upon the death of the person who had been providing these funds.

> To replace the value of wealth that is given away or consumed during life and has not been replaced for the heirs.

> To pay death taxes, as discussed earlier in detail.

> Business purposes, for business continuation plans, key employee benefits and compensation packages for employees and officers.

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