Life insurance provides a death benefit to the beneficiaries when the insured person dies; this is done in exchange for premium payments from the policyholder. Because your risk of death increases as you age, life insurance tends to be cheaper if you purchase it when you’re younger.
There are several common reasons for buying life insurance. These include:
- To replace your income for any dependents who rely on that income.
- To pay for funeral expenses and other final expenses.
- To provide a financial legacy for heirs.
- To pay estate or inheritance taxes.
- To provide a donation to a charity.
- To create a savings vehicle if there is or may be a life insurance need.
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