Reasons to Buy Life Insurance

Life insurance is one of the most widely owned financial instruments because it can fulfill so many different needs. While the overriding need for most people is to provide financial security for those who are dependent, in one way or another, on a bread-winners income, the specific reasons people buy it are wide-ranging. If you ask 10 different people why they purchased their life insurance policy you are likely to get 10 different reasons. Here are the most common reasons to buy life insurance:

Not to be a Burden

This is probably the number one reason why younger, single people will buy an insurance policy. Even though they are not married or they don’t have anyone who is dependent on them for security, they recognize that their death will create a financial burden on someone. Most single people have accumulated debt that needs to be repaid, and they realize that there will be some final expenses that have to be paid. Unfortunately, it is a minority of single people who understand their responsibilities in this way as many leave the financial burden of debts and final expenses to others.

Keep my Family in their Place

This is the number one reason why married bread-winners buy life insurance as they don’t want to imagine their surviving family members suffering any decline in life style or security. The most responsible of these will want to see their family be able to stay in their home, continue to attend the local schools dressed in nice clothes, and to fulfill the dreams they have for their children. So, their life insurance coverage will be sufficient to pay off the mortgage, provide a continuing income stream to meet lifestyle needs, and set up a fund for college expenses.

It’s the Right Thing to do

For whatever actual needs they might have, these people feel an overwhelming sense of responsibility as individuals to make sure that their obligations are met. It is likely that they benefited from the proceeds of a life insurance policy, or, at the very least, were instilled with the virtues of life insurance by their parents. In many cases, people with a strong sense of responsibility will buy life insurance and even before their situation requires it because it is the right thing to do.

Leave a Legacy

Many people envision themselves building a successful career or business that will enable them to enjoy all of the fruits of life. Unfortunately, life gets off track and these dreams are not always realized. Misfortune, premature death, or just simple bad luck can derail the best laid plans, but, for some people, their desire to leave a legacy, to leave a better life behind for their children and children’s children is the reason why they will own life insurance well into their lives. Some people have even bought life insurance at a later age for this purpose when it became apparent that the legacy they created on their own would not be sufficient.

For the successful people who have created substantial legacies, the desire to have as much of it pass on to their heirs as possible, unencumbered by taxes and settlement costs, will buy life insurance through an irremovable trust for the express purpose of paying for these expenses and providing liquidity for the estate.

Keep a Business Alive

Following the great recession of 2008, a record number of people started new businesses which accelerated a trend that began in the late 1990s. As a result, the future financial security of many families is reliant upon the success and the continuity of a small business. Business owners are the first to recognize that the business not only provides a current income stream for the family, but it also provides a financial security for future generations. Life insurance is the only solution that can provide the capital a business usually needs to be able to continue when a business owner or partner dies.

I Love my Family

Life insurance is as much an emotional purchase as it is practical. Yes, it will pay for the needs and wants of a surviving family, but it also considered to be the most unselfish act of love and devotion to family that a person can express. Yes, it is the responsible and right thing to do, but some people buy it because of how it makes them and their families feel about each other.

My Spouse Made Me Buy It

It’s not uncommon for people to avoid buying life insurance or procrastinate as long as possible. Some people can’t stand the thought of the process for buying it. Others don’t want to think about the possibility of their family actually needing to use it. There are even some who imagine that their spouses will just take the money and run off with another partner. For whatever reason, many bread-winners need to be cajoled into do what is right.

Spouses who insist on their partner buying life insurance do so out of real concerns over their financial future should the unthinkable happen. Spouses who need to brow-beaten into buying life insurance need to understand that their partners don’t understand why the person who supposedly loves them wouldn’t commit the ultimate act of love and devotion by protecting their financial security.


Most people have a need for life insurance, but it is usually the underlying reason why they want it that gets them out the door or onto the computer to go find it. Life insurance companies also offer annuities rates. People will buy life insurance when their reason becomes clear to them. Whatever the reason is, it is always the right reason if it makes them act on such an important purchase.