Purchase of Life Insurance and Insurable Interest & Personal Uses of Life Insurance

Insurable Interest

To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss.

Survivor Protection

The death of the primary wage-earner will usually stop the flow of income to a family. The death of a nonearning spouse who cares for minor children can also cause great financial hardship for the survivors. Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured’s death.

Estate Creation and Conservation

A person may create an estate through earnings, savings, and investments, but all of these methods require disciplined action and a significant period of time. The purchase of life insurance creates an immediate estate.

Liquidity

The policy’s cash values can be borrowed against at any time and used for immediate needs.

Asset Protection

The use of life insurance to guard one’s wealth against creditor claims without engaging in practices that are ultimately illegal, such as concealment or fraudulent transfer.