subject: Life Insurance- Primary Purposes of Coverage [print this page] Life Insurance- Primary Purposes of Coverage
When buying life insurance, many people assume that the coverage is specifically to offer financial security to their family or take care of their expenses after they are gone. While this is the most basic use of coverage, there are other purposes for life policies also. This is a policy where an insurance company will pay money to a named beneficiary in the event of the death of the insured person, but it can do much more than that. The two most basic purposes of a life insurance policy are:
Lost wages replacement: People who are sole earners or major earners in their family need to make sure that they can account for the income that will be lost once they are gone. In order to protect their family, they can buy a life policy that will give a specific amount of coverage to make up for lost income.
Final expenses: Paying for final expenses often falls as a burden onto those left behind. If you buy a life insurance policy, you can make sure that your final expenses, remaining debts, and other bills are taken care of and that your family or loved ones don't have to deal with that burden on their own.
Life insurance is never about protecting yourself. It is about protecting the people and the assets that you leave behind when you are gone. In that sense, it is one of the most selfless acts that you can engage in when it comes to financial planning. There are a lot of cost factors involved in purchasing life insurance and determining the right amount of coverage for your needs, but it ultimately becomes a matter how what you are buying insurance for and how much protection you want to have.
Depending on the purpose of your life insurance policy, you can choose between a term life and a whole life policy. Term insurance is created to offer short-term protection for financial security while whole life provides long-term coverage that can also offer investment options and cash value that adds to the death benefit that is being purchased. You have to look at your intentions for buying life insurance and the type of coverage that will best take care of your intended use so that you can purchase life coverage that fits your needs and fulfills your intended purpose. With a little research and understanding, it should be easy to find the best insurance policy.
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