LIFE INSURANCE
For most people, the purpose of life insurance should be to replace the financial contribution made by a family member.
Life insurance can be pure insurance, which pays only on the death of the insured, or cash value insurance, which also has a savings vehicle. Most people who need life insurance are better off with pure insurance and saving for retirement through other vehicles.
Proceeds from life Insurance covers three types of expenses: replacement of the policyholder’s income or work, estate taxes, and burial costs. When you consider the amount of insurance to buy, consider the following:
1. Most of the life insurance should be on a family member whose salary is important to the family budget.
2. Consider a relatively small life insurance policy on a stay-at-home parent to cover child care and other expenses.
3. Don’t buy life insurance on children. Instead, buy life insurance on other family members for the benefit of children.
