Life Insurance, Purposes and Basic Policies

Life insurance coverage

With families dependent on cash for their daily lives, there is a real need for protection from financial disasters when the source of cash disappears. Life insurance is a way to protect yourself if you lose all or part of your family's income due to death. It can also provide funds to replace services provided by family members (such as childcare).

Protect and save?

The main purpose of life insurance is protection, immediate wealth to meet the needs of the bereaved. Some policies include savings features, but there are many other ways to save money and make investments. When purchasing life insurance, your primary concern should be adequate protection. The potential saving function is secondary.

Even if your protective needs are met, we encourage you to consider other forms of family savings and investment planning. Whether to save or invest through life insurance or other savings or investment vehicles is a family decision based on needs, preferences and ability to manage finances. This is a savings/investment decision, not an insurance decision. Better returns can be obtained through other savings and investment vehicles. There are also various savings and investment options that have no or lower fees than life insurance.

Income from the savings or investment component of life insurance is tax-free. However, there are various other savings/investment vehicles that allow income tax deferral. However, life insurance income, which is part of the income paid to the beneficiary after the death of the insured person, is not subject to income tax.

Needs Assessment

Families should consider all financial needs and other available resources when determining life insurance needs. Your needs depend on:

• Number and age of relatives (wife, children, parents, etc.).
• Desired standard of living for dependents in the event of the employee's death.
• The amount of other financial resources the family has (such as social security, savings, investments, and the ability of dependents to earn income).

Notes when purchasing

• Financial needs of bereaved families include:
• Various expenses associated with death (funeral expenses, final medical expenses not covered by insurance, bereaved family arrangement expenses, relocation expenses, etc.)
• The bereaved family's daily living expenses (clothing, food, shelter, etc.).
• Debt payments (mortgage or farm loans, car loans, etc.).
• Special needs (covering loans, covering children's education expenses, gifts for family, friends, or organizations).
• Retirement income of surviving spouse and other dependents. 

Purchase Principles

When purchasing life insurance, families should plan and choose insurance to meet their financial needs. Life insurance should be used to cover financial needs that cannot be met by other means.

The plan must match the family's ability to pay, as premiums must be paid to maintain the insurance.

Families should choose the benefit period that offers the lowest rate (usually annual). This requires planning and should be included as an item in your monthly budget. Families should read each policy carefully. Policyholders must ensure that insurance funds are maximized for the financial security of the insured's surviving dependents.

Family insurance programs should be reviewed regularly and adapted to changing needs.

• Basics
• Pure coverage (term) and present value term insurance
• Term life insurance is life insurance that provides pure coverage only. it insures a person against it

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