What is the point of life insurance?

Question

Sounds like a scam to me.

Answer 1

The point of life insurance is to protect the people you care about. (And this is not necessarily just for the spouse and/or children. Someone will have to pay final expenses, even if you're single. And if you wait too long, you may not be insurable.)

You can buy a small amount to cover final expenses and/or larger amounts to cover lost wages. The reason it's a good idea is that you get coverage for the full amount from the day you buy the insurance. It may take you a lifetime to put that much money away on your own.

True, you might very well have been able to do that. However, you aren't guaranteed to be able to live long enough to do so. Even if you're the most cautious human being on the face of the planet, you aren't guaranteed tomorrow, much less another fifty years.

In a lot of cases, life insurance is also the only thing you can leave to someone that's tax-free. If you're not familiar with estate taxes, you should check into that. Because they make the standard annual IRS April 15th(ish) deadline seem like a real walk in the park. On many estates (there's a threshold for determing it), there's a 50% tax levied for family members other than a spouse (spouses only pay 25%.) So, even if you left everything paid off, there's still going to be a huge payment due to the Federal government. That's most often why you see families selling off the family home after someone's passing.

As I always say to people I'm talking to about life insurance, everyone pays for life insurance in one way or another. You can pay for it a little bit each month over time, or someone else can pay for it all at once (and when they can least afford it.)

Sure, it sounds like a scam to you. I'm sure the taxes do too. That doesn't change the facts.

Answer 2

depends on how you view it. its a risk calculation. whole life is insurance but also the investment of money into the insurance company and is considered one way to invest. term insurance is designed to provide an amount of coverage to allow certain functions like the loss of salary in the case of death to be covered for those still living.
so here is the scoop, you live by your self, not family, no relatives that you have any repsonsiblity to take care of, you probably do not need life insurnace. have enought to bury your self, and your good to go.

if you are married and have a family and you are the sole provider, than think what it would cost to keep providing for maybe 18 or 20 years for your kids, their college etc. and suppporting your spouse for 30 or 40 years. say you make 50 - 60K a year, and you should probably have some 1 to 2 million in policies, if you wanted to take full care of everything.

but more important than the insurance is to make sure you have a plan on how that money wiol be invested and secured so that you family will not be cheated out of it. .

now that is just worrying about your death, now think of the cost of your wife dying and leaving you with a family and possiably the loss of incom e form her job. how would you replace that.

That is the insurance scam.

Answer 3

Just like everybody else has answered: It's for the people left behind more than for you. If I had no family...I would not have insurance. As it is, I carry term insurance....it is cheaper and in the event of my death, would meet the needs of those I leave benind, I hope. As far as it being a scam....it's more like legalized gambling. The insurance company is betting that I will not die soon and they will make money on the premiums that I am paying. I am gambling on the event of my death coming before I would actually lose money (the premiums I pay and the interest I would have gotten on that total amount of money if would have invested it). So, term insurance is OK with me. Whole life is more of a scam in that I could make a better investment with my money than that.

Answer 4

If you Love your wife and kids, I would think that you would want them to maintain the same standard of living were you providing for them should you meet with an unfortunate early death. As well as providing your kids with the education funds that you would have given them. Plus making sure that always have a roof over their heads. Plus fully funding the retirement plan for your wife.

None of this will happen without Life Insurance in the appropriate amount should you meet with an unfortunate early death.


Scam......I think not!

Answer 5

Indians are under insured, plus since india is prone to natural and made calamities , since risk is very high to human life ,and thats the reason as per human life value if u learning menber losses life his family gets financial supoort to certain extent ,there is no scam in this ,agian insurance is matter of solicitation , people are not forced they take insurance as [per their choice and requirement, and its required if you want your family to be happy atleast financially after your gone , then insurance is must

Answer 6

Well, you decide what the POINT is, before you buy it, then you buy the policy that suits your needs.

The point of MY life insurance policies, is to provide enough cash for my hubby to pay for childcare and put the kids through college if I should kick off before they're grown.

So I have term coverage, because once the kids are grown and through school, we won't need it any more.

Answer 7

Life insurance is very important, When you die it will take care of your funeral, cemetery bills, death certificates, For instance, When my daughter passed away she had no life Insurance, It cost us close to 10.000 dollars, If she had Insurance then we would not have had this expense. We did not to anything spectacular, we kept everything to a minimum.

Answer 8

If you're married with children, it provides money to them to get by on in the event of your death. But yeah, it sounds like something for nothing to me, too.

Answer 9

Its so when you die the people you leave behind will be able to cover you funeral expenses and other inherted expenses. Also if you have people relying on your income it provides a security net for them when your source of income is no longer available.

Answer 10

for example 1000persons taking life insurance ,if one died we all together contributing money for the died persons family.so we are compensating loss of earning person of the family by the way of money.in my point of view it is halal because i think it is hadhiya(donation) of 999 persons for one family.