Life insurance protects families from the financial loss associated with the death of a loved one, providing critical financial resources to cover daily living expenses, mortgage payments, tuition, child care and outstanding loans, or to continue a family business.
Having life insurance means that surviving family members won’t have to sell assets to pay bills or taxes. Another advantage is that beneficiaries don’t have to pay federal income taxes on the money they receive.
Life insurance enables individuals and families from all economic brackets to maintain independence in the face of financial catastrophe, helping to relieve pressure on government entitlement programs. Very few Americans can self-insure the risk of premature death through their own financial means. Life insurance makes managing this risk affordable through the pooling of risk.
Businesses use life insurance to protect against the financial uncertainty associated with the death of an owner or key employee and to fund important employee and retiree benefits.
There are different types of policies and options available to meet different needs.
In 2007, Americans purchased $3.1 trillion of new life insurance coverage, 5 percent more than the previous year. Life insurers paid $58 billion to beneficiaries of life insurance policies in 2007, providing critical financial resources to families after a tragedy.