May 26 2008
Life Insurance
At 8:30 one evening two newlyweds bought a $3,000 family policy with a $10,000 temporary rider. (A “rider” lets a person mix temporary insurance with permanent coverage.) They paid the first premium of $15.19. The next day the husband went to the stone quarry where he worked and was killed in an accident. The protection of the policy had gone into immediate effect because of payment of just one premium.
The result was that the widow was entitled to receive $6,000 in a lump sum. This was a double payment of the basic amount because of the accidental nature of her husband’s death. In addition, she will receive $10,000 over a period of time. Thus, the prepayment of just fifteen dollars and a few cents will provide $16,000 for a widow and her unborn child.
This case illustrates a basic truth. Life insurance cannot insure a person against death. But it can protect his dependents against some of the economic loss caused by his death. That is the primary purpose of life insurance.
For many persons life insurance has taken on a secondary role—that of building up a savings account to provide cash benefits in case one is disabled or if one retires.
Since there are different viewpoints with regard to life insurance and its various kinds of policies, how should a person who wants its protection buy such insurance? He should buy it according to his own needs, circumstances and outlook for the future. The first step is to evaluate life insurance quotes.
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