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Life Insurance Learning Center - The Basics - Why

Why Life Insurance!

Life insurance is tied to the economy, so when people purchase a life insurance policy, they are investing in a part of the economy. By contributing to a life insurance plan, the person accumulates a large sum of funds which form a type of investment capital. This "investment capital' is then used for investing in government securities, stocks and commercial and private properties. This is done either directly or through mortgages. Therefore, investing in an insurance policy is like investing in the government's institutions.

Also, another valid reason that purchasing life insurance is important is because is relieves pressure on the social welfare systems in a lot of states. Why is this? Well, because sometimes the death of someone who is the chief breadwinner of the family can be a financial hardship, and many families do not have any tangible funds with which to support themselves. Therefore, they resort to the government through social welfare to help them with their finances. Having an insurance policy insures that the beneficiaries will be well cared for financially.

Because the government favors life insurance policies so much, in some states, governments will offer a tax relief to policy holders.

In general, the life insurance industry is a major one which impacts the U.S. in a number of ways.


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