Life insurance aims to protect the insured and their loved ones. It provides family protection and financial security to surviving family members upon the death of the insured person. It can also cover a particular need such as paying off a mortgage or other debts upon the insured’s death. At the very least, insurance can provide the funds necessary for the deceased person’s burial expenses.

In business, life insurance can compensate a company on the death of a key employee or to provide a surviving partner the resources to buy out the deceased partner’s share of the business. It can likewise provide funds to pay estate taxes or other final obligations necessary to settle a deceased person’s estate. Marriage, having children, retirement and other changes can all affect a person’s insurance needs.

A lump sum of money is provided to the beneficiaries upon the death of the insured. This is the case whether the cause of death is natural or accidental. The purchased life insurance is a personal choice of a person based on what he/she is trying to protect. It can be to replace the loss of future income, to provide the ability for a spouse or partner to keep a home, to allow a surviving partner to raise and educate children or to provide income to assist an elder who relies on family for daily support.

Life insurance is what the term implies. The cover insures a person’s life by promising to pay a set amount in the event of death while the policy is in force. It does not pay out, however, if the insured commits suicide, dies from drunk-driving or drug abuse or has purposely concealed any medical condition that would have an effect on the insurance policy itself.

A Term Life Insurance is good for covering needs that disappear with time such as mortgages or college education. A Whole Life Insurance guarantees a death benefit. Universal Life Insurance allows for the increase or decrease of death benefit while providing access to policy cash value by loan or withdrawal. Variable Life Insurance guarantees a minimum death benefit and also provides a choice of investment accounts. Variable Universal Life Insurance is a combination of the features of Universal and Variable Life Insurance.

In order to determine whether adequate protection is provided by an existing insurance, an insured should seriously look into the numbers. Calculation should include death expenses that would include funeral costs, medical costs not covered by insurance, federal estate taxes, state death taxes as well as probate costs and legal fees. It should also include the family’s future sources of income and future expenses. Life insurance should fill the gap between the expected income and expenses.

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