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Category Archieve: Life Insurance Blog
  • Nov-05-2013
  • Richard Reich
Life Insurance Policy

If you’re like most people who purchase life insurance, there are five main reasons for doing so.  National Underwriter, an insurance industry trade paper, recently surveyed agents about the primary concerns and goals of their clients.  Agents are a good source for this information, since they usually do some kind of needs analysis (formal or informal) with their clients to determine the need for this coverage.

When used for personal needs, rather than for business or charitable needs, I agree that most folks fall under one or more of these five reasons found in the survey:

  • Providing income for the family in the event of the death of the primary income earner.
    This was the overwhelming response from the agents being surveyed.  Seventy-five percent of those surveyed cited replacing breadwinner’s income as the main reason people purchase this insurance.  There’s no “safety net” available anywhere that matches this level of protection for one’s family 
  • Paying off debt.
    Forty percent of the agents surveyed cited this as the number two reason.  However, this was the number one reason for younger, single people with no family to protect, but with debts that needed to be paid. 
  • Paying for funeral expenses.
    Final expense insurance can be traced back to when life insurance was first being sold and is still a very popular reason why folks purchase this type of coverage.  With funeral costs rising over the years, we have seen the death benefit growing to keep up with the costs. 
  • Wealth transfer.
    Thirty-five percent of surveyed agents responded that wealth transfer was a top reason people purchase life insurance.  Sound financial planning with a professional planner typically includes this coverage as part of the plan.  The greater the estate being transferred, the more the need for strategies involving life insurance policies. 
  • Children’s Education
    Twenty-five percent of agents cited children’s education as a top reason people buy life insurance.  The living benefits of a cash-value policy are often used to help pay for the rising cost of secondary education.  Naturally, the death benefit is quite often used for this reason too.

While I have seen people purchase life insurance for other reasons, I would have to say that, in my experience, these five reasons account for the majority of policies purchased.

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  • Intramark Insurance Services, Inc., Insurance Services, Glendale, CA

  • Intramark Insurance Services, Inc.
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