Who Needs Insurance, and When

“If anything should happen to me…” With that idea planted in a man’s head, he is an easy mark for a life-insurance salesman. This vague phrase gets around the ugly word “death”; and combined with pleasant phrases such as “security” and “building an estate,” it develops the impression that life insurance is the ideal protection against almost any conceivable difficulty that a family might encounter. The great majority of American families are paying for some life insurance, but it is a rare person who has more than a foggy notion of what his policy will and will not do for him, or any notion whatever of how the cost and provisions of his policy compare with other available possibilities.

Life insurance in its pure form is a simple idea, but the companies selling it seem to have decided that the way to build up a large volume of business is to make life insurance so complicated that nobody can understand it without devoting an unreasonable amount of time and effort to the task.

Now let us try to clear away some of the fog. Pure life insurance is actually death insurance. It is a means of arrang ing, in advance, to offset or reduce the bad financial effects that may result from a person’s death. A life-insurance policy is a contract between an insured person and an insurance company. At regular intervals the insured person pays a charge, called a premium, and in return for this, if he dies, the company pays the specified face, or death, value to the person named as beneficiary. These are the easily understood essentials of life insurance. Certified Financial Planner - Read More.