What is a good reason to purchase life insurance?
Asked by: Casey Lowe | Last update: August 24, 2025Score: 4.4/5 (51 votes)
Which of the following is the best reason to purchase life insurance?
Final answer: The best reason to purchase life insurance is to provide financial protection for family, while annuities are more focused on providing future income in retirement.
What is the primary reason for purchasing life insurance to provide?
While the primary reason for purchasing life insurance is to provide financial security for your loved ones after your death, many policies offer benefits that can be used by the policyholder during their lifetime.
What is the main benefit of choosing to purchase insurance?
Insurance can help keep your life on track after an unfortunate, unexpected event. Your independent insurance agent is a great resource to learn more about the benefits of insurance, as well as the benefits in your specific insurance policy.
What is a major advantage of life insurance?
A major advantage of life insurance is that if you suddenly pass away, your loved ones will be able to file a claim and collect a death benefit. They can use the benefit to help pay for many types of expenses, such as funeral costs, debts, everyday bills, and college tuition.
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When should you buy life insurance?
As we age, we're at increased risk of developing health conditions, which can result in higher mortality rates and higher life insurance rates. You'll typically pay less for life insurance at age 25 than at age 40. Waiting until age 60 may mean an even bigger rate increase and limited policy options.
Do you get tax relief on life insurance?
Life insurance premiums, whether term or whole life, are generally not tax deductible.
What is the main purpose for buying life insurance?
Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.
Who really needs life insurance?
People with young children are strongly recommended to have life insurance to protect their family. Homeowners should take out life insurance so that the death benefit can pay off the mortgage. Business owners and those who want to pass down a financial legacy are also advised to purchase life insurance.
What is the best type of life insurance to get?
A whole life policy is generally considered the most secure form of insurance. Whole life policies have more rigid premium payment requirements than universal life policies. As long as scheduled premium payments are paid, the cash value is guaranteed to increase each year.
What factors should you consider before you buy life insurance?
Should you use life insurance while alive?
Choosing a life insurance plan with living benefits may provide resources while you're still alive, potentially giving you an option if you encounter an unexpected financial need. Having a life insurance policy in place is an important decision for anyone to make.
Are there situations where insurance won't help?
The most common exclusions to a homeowners insurance policy are related to large-scale disasters, such as floods or war; damage due to negligence or normal wear and tear; and inherently risky items, such as trampolines. But you can buy additional coverage to protect those things.
What is the primary purpose of the life insurance?
The primary purpose of life insurance is to provide a financial benefit to dependents upon premature death of an insured person. The policy pays a specified amount called a “death benefit” to the named beneficiary, when the insured dies.
What type of life insurance gives the greatest amount?
Term insurance is initially cheaper than other types of policies that offer the same amount of protection. Therefore, it gives you the greatest immediate coverage per dollar.
What is the best type of insurance to have?
Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have. Employer coverage is often the best option, but if that is unavailable, obtain quotes from several providers as many provide discounts if you purchase more than one type of coverage.
Do we really need life insurance?
While not mandatory, life insurance is important if others depend on your income or if you have financial obligations like a mortgage or debts. It helps provide financial security for your loved ones, covering expenses and helping ensure their future stability in your absence.
Who gets denied life insurance?
Medical conditions such as diabetes, high blood pressure or heart disease may disqualify you from coverage if your illness is life-threatening. If you've had cancer or are currently undergoing cancer treatment, your life insurance application may be denied until you've been in remission a certain number of years.
Who gets the payout if you have life insurance and you pass away?
The policyholder designates one or more beneficiaries, who are the individuals or organizations that will receive the payout. The death benefit is typically paid out as a lump sum, though some policies may offer other options like installment payments or an annuity.
Does life insurance cover funeral costs?
Does life insurance cover burial costs? Yes, life insurance policies will pay a lump sum when you die to a beneficiary of your choice. That money can be used to pay for your funeral or for any other general financial needs of your survivors.
Why would someone buy my life insurance policy?
Life Insurance Policy Purchasing
Life settlement companies buy your policy so they can become the beneficiary. They receive the death benefit from your policy when you pass away, not your heirs. You might feel a little uncomfortable with the thought of a person or company profiting off your death.
What disqualifies life insurance payout?
Life insurance proceeds can be denied. Some denials are legitimate, like in case of policy lapses, material misrepresentations, or exclusions in the form of illegal activities or war. In other cases, bad-faith insurers use elaborate methods to reject claims so they do not have to pay the proceeds.
Can the IRS take my life insurance?
If you are the beneficiary of a life insurance policy and you owe the IRS, the IRS can seize those proceeds. Additionally, if you have a life insurance policy with no beneficiary named and you owe the IRS, the IRS can seize the policy funds before they are distributed to your next of kin.
Which type of beneficiary should be named?
A lot of people name a close relative—like a spouse, brother or sister, or child—as a beneficiary. You can also choose a more distant relative or a friend. If you want to designate a friend as your beneficiary, be sure to check with your insurance company or directly with your state.