http://wiki.answers.com/Q/What_is_the_purpose_of_life_insurance?

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The most common being to protect the owner's family or financial interests in the event of the insured's death. Other purposes include estate planning or, in the case of cash-value contracts, investment for retirement planning. Bank loans or buy-sell provisions of business agreements are another acceptable purpose.

Premiums paid by the policy owner are normally not deductible for federal and state income tax purposes, and proceeds paid by the insurer upon the death of the insured are not included in gross income for federal and state income tax purposes.[18] However, if the proceeds are included in the "estate" of the deceased, it is likely they will be subject to federal and state estate and inheritance tax.

Why You Should Buy Life Insurance

By Andre McNeil on February 17, 2012 A A A
Filed Under: Life Insurance, Life Stage ou!le

"eciding #$et$er you need life insurance can be a co%!licated !rocess& '$e decision can be e(en $arder #$en you are younger& '$is article $ig$lig$ts so%e of t$e issues t$at you s$ould

t$in) about& *e $o!e t$at t$is #ill $el! you to %a)e an educated decision& +For related reading, see How Much Life Insurance Should You Carry?,

SEE: Intro 'o Insurance

Providing for Your Dependents If You Die Let-s start #it$ t$e %ost ob(ious reason for #$y so%eone s$ould in(est in life insurance &&& t$e fact t$at it can re!lace your inco%e if you die before your de!endents& .ou %ay #ant your c$ildren to go to college and your fa%ily to en/oy a certain )ind of lifestyle& Li)ely, you still #ant t$is to $a!!en e(en if you die !re%aturely& But, if you are t$e !ri%ary bread #inner for your fa%ily, t$ey %ay not be able to afford it if you die and do not $a(e enoug$ sa(ings to co(er t$eir e0!enses& .ou can address t$ose concerns by buying enoug$ life insurance&

You Have Options .ou $a(e t$e o!tion of buying a ter% life insurance !olicy, #$ic$ #ould co(er you for a set nu%ber of years, generally ranging fro% 10 to 10 years& '$ese !olicies !ay a benefit only during t$e ter% !eriod t$at t$e insurance co(ers& '$ese can be a good o!tion if you #ant co(erage for a set !eriod, say, until t$e c$ildren finis$ college& Five Chart Patterns you need to know .ou also $a(e t$e o!tion of buying a #$ole life !olicy, also )no#n as !er%anent life insurance& '$ere are se(eral ty!es and sub categories of eac$ ty!e, and t$ey usually !ay a benefit to your beneficiaries #$en you die&

'$e a%ounts t$e !re%iu%s #ill be #ill de!end on t$e !olicy you !urc$ase&

Insuran e !ay "e a #ood Invest$ent Many young !rofessionals are loo)ing for in(est%ent o!tions for t$eir sa(ings& For t$ese indi(iduals, a (ariable life insurance !olicy can !ro(ide a good addition to t$eir in(est%ent!ortfolio, as it allo#s in(est%ents in stoc)s, bonds and %utual funds& '$ese in(est%ents can allo# your cas$ (alue to increase %ore 2uic)ly, t$oug$ t$ere are so%e in(est%entris)s& *$en c$oosing a !olicy #it$ an in(est%ent feature, you can li%it your ris)s by c$oosing one #it$ a guaranteed %ini%u% deat$ benefit& +'o learn %ore, read Variable Vs. Variable Universal Life Insurance&,

You Can Se%% Your Po%i y If you beco%e ter%inally ill and are in need of cas$ to co(er %edical and ot$er e0!enses, you %ay $a(e t$e o!tion of selling your !olicy to a (iatical settle%ent co%!any at a discounted !rice& In e0c$ange, t$e settle%ent co%!any #ould %a)e t$e !re%iu% !ay%ents and in turn collect t$e a%ount of t$e face (alue u!on your deat$& *$ile t$e a%ount you #ould recei(e in t$is case is less t$an t$e a%ount your beneficiaries #ould recei(e, if you continued !re%iu% !ay%ents and t$ey in$erited t$e a%ount, t$e lu%!-su%cas$ !ay%ent can co%e 2uite in $andy if you $a(e no ot$er cas$ resource&

You Can &

u$u%ate Cash

*it$ insurance, you also $a(e t$e !ossibility of allocating a !ortion of your !re%iu%s to a cas$ accu%ulation (e$icle, an o!tion usually a(ailable under uni(ersal life insurance !olicies& '$is accu%ulated a%ount can ser(e as a cas$ reser(e, and can be used to !ay insurance !re%iu%s if your dis!osable inco%e is no longer sufficient to !ay t$ose !re%iu%s& 3o#e(er, you #ill need to ensure t$at t$e a(ailable cas$ is sufficient to !re(ent t$e !olicy being la!sed due to una(ailability of cas$&

How !u h Do You 'eed( '$e a%ount of insurance t$at you need de!ends on #$at you #ant it to co(er& Loo) at $o# %uc$ you earn, and $o# %any years your fa%ily #ill need to re!lace t$at inco%e if you die !re%aturely (ersus $o# %uc$ you $a(e already sa(ed& Also loo) at #$at ite%s t$at you #ant to %a)e sure #ould be !aid for, suc$ as college tuition for your c$ildren&

)he "otto$ *ine Life insurance is not for e(eryone& But, you s$ould not dis%iss it #it$out doing so%e researc$& If you $a(e ot$ers #$o de!end on you financially, it is (ery li)ely t$at you need it& .our financial ad(isor can $el! you to decide #$ic$ ty!e of !olicy is best for you& Buying life insurance can be one of t$e best financial ste!s t$at you ta)e for you and your fa%ily& +For %ore infor%ation, see ha! "o #$%ec! hen &%%lyin' For Life Insurance&,