Why people buy life insurance ?

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PostPosted: Tue Apr 14, 2009 8:45 am   Post subject:   

emotional reasons also play a significant role in buying a life insurance policy by an individual......if you don't have any other significant assets to pass onto your surviving family or loved ones, you can create an inheritance by naming your heirs as beneficiaries in your life insurance policy.

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PostPosted: Tue Apr 14, 2009 10:46 am   Post subject:   

Hi there,



Now-a-days people also invest in life insurance as an investment perception. Because the returns of the investment are not taxable under Life insurance.



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Bhartiaxa


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PostPosted: Tue Apr 14, 2009 12:19 pm   Post subject:   

am nt sure whetjher i should put this point forward or not....but it might be an important reason..... life insurance policies can provide cover for the costs of a funeral, which can be extremely expensive events. So you can ensure your dependants do not have to bear this financial burden. Pre-paid funerals allow the insured to choose the type of funerals they want too.

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PostPosted: Tue Apr 14, 2009 1:35 pm   Post subject:   

Hi Super,



Quote:
This can be a very good reason to buy a life plan since it'll help you to maintain the lifestyle even when you can't earn wages anymore.


Do such annuity returns come to the insured on a monthly basis? Does the value remain uniform throughout this payment period? I'd heard that such returns are associated with the profits of the carrier. Is that true?



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PostPosted: Wed Apr 15, 2009 6:15 am   Post subject:   

it depends on the kind of Life annuity ....... some life annuities are :-



1. Fixed and variable annuities

2. Guaranteed annuities

3. Joint annuities

4. Impaired life annuities

e.t.c



these annuties have further subdivisions.......for example in case of immediate fixed life annuity , an insurance company determines a monthly fixed payout for insured based on his sex, age, investment amount, and the current interest rate.......



in this case return does not depend on company's profit...... but in some other plan it might

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PostPosted: Wed Apr 15, 2009 6:38 am   Post subject:   

Well Super, I guess..I got an explanation for Guaranteed annuities and Impaired life annuties. But what about these 'joint annuities'? Any example!



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PostPosted: Wed Apr 15, 2009 11:57 am   Post subject:   

I think most of the people buy life insaurance to safe guard the future of there young generation ...!!!

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PostPosted: Wed Apr 15, 2009 1:18 pm   Post subject:   

hey steven....... joint annuity is a kind of annuity that makes payments for the lifetime of two or more beneficiaries ... nothing much

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PostPosted: Wed Apr 15, 2009 1:36 pm   Post subject:   

adding onother point to the discussion .......

some life insurance policies also cover against the risk of having very serious illnesses. If the insured develops an illness listed by their insurer – such as a heart attack or cancer – a lump sum or regular amount can be paid out to cover, for example, loss of income.

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PostPosted: Wed Apr 15, 2009 2:56 pm   Post subject:   

akhi0001,

I'm going to take this apart for you: please pay attention.

So that we’re all on a level playing field here, let’s assume that in every case noted below, a policy owner/insured intends to keep a life insurance policy until their heart stops beating – whenever that might be.



People buy life insurance because:



1. Income replacement:



You are, of course referring to a dead person's income. Otherwise, you'd be talking about some type of disability policy. Which, by the way, is not life insurance. If money is EVER removed from a policy’s cash value, it generally lapses before the insured dies.



2. Saving:



Life insurance is not a savings account. Always remember that the cash value is nothing more than an over-payment of premiums and, by design, this money is almost always used to offset the ever increasing cost of insurance in future years. If you want a savings account, open one at your local bank and leave the life insurance policy alone.



3. To insure their lives:



BINGO!! You got that one correct.



4. To help their family to maintain financial losses if he is no more:



I think I understand what you're trying to say here. If you meant to say that a family could use the money from a life insurance policy to maintain their standard of living if the primary breadwinner should die unexpectedly, you are correct.



5. Tax savings:



Life insurance is used for estate planning purposes and is often used to pay taxes. I'll give you this one as well.



6. Medical benefits:



Life insurance can be used to pay hospital bills after the insured dies. I suppose money can be taken from the cash value to pay medical bills as well. Provided, of course, the life insurance policy is no longer needed.



7. Children:



Yes, life insurance can be used to replace the income of a deceased parent.



8. Children’s education:



Because I've investigated (and seen agents prosecuted) for selling life insurance as a means of sending children to college, this is a “grey” area for me. I guess that as long as a parent understands they must die in order to send their kids to college, this one would work as well.



9. A marriage (I’m in California and everybody marries everybody over here):



If a girl’s father dies, the life insurance proceeds can certainly be used for her wedding. Had he remained alive, he would have undoubtedly paid for it anyway. Remember; if the father intends to keep the policy until he dies, money from the cash value should not be removed…….unless he dies soon.



10. To secure their lives:



This particular statement is quite broad, however, I think I understand what you're trying to say here and I agree with you.



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PostPosted: Wed Apr 15, 2009 3:05 pm   Post subject:   

Bhartiaxa



Quote:
Now-a-days people also invest in life insurance as an investment perception. Because the returns of the investment are not taxable under Life insurance.




Life insurance is, at best, a very poor investment vehicle. In most cases, agents who sell life insurance as investments are in violation of Internal Revenue Regulations and State Insurance Code.


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PostPosted: Wed Apr 15, 2009 3:07 pm   Post subject:   

Life insurance can be used as a means to launder money. There's one you didn't expect.



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PostPosted: Thu Apr 16, 2009 6:16 am   Post subject:   

Super,



Quote:
joint annuity is a kind of annuity that makes payments for the lifetime of two or more beneficiaries




Do I suppose guaranteed annuities could also be termed as 'joint



annuities' if they're being offered to two or more beneficiaries?



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PostPosted: Thu Apr 16, 2009 9:46 am   Post subject: insurance  

INSINVESTIGATOR: GOSH!! I think you covered just about ALL the reasons to get Life Insurance. My concern, of course, is my 'offspring'. He's a Minor now, but, I have a 'Trust' set up for him. Funerals can be expensive. One of my 'Clients' had recently passed away and she had NO nsurance of any kind. Her family is trying to sell some of her belongings to pay for the Funeral. ..I think it's sad.

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PostPosted: Thu Apr 16, 2009 12:22 pm   Post subject:   

sdchargersfan, it's interesting that you say that your concern is your offspring, yet he is not the beneficiary of your life insurance.



A trust isn't very meaningful unless there is enough money in the trust. A trust can very easily have negative financial aid impacts when it comes to college.

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