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what is life insurance?


Life Insurance is a program designed to enable a group of people to protect one another from the financial consequences of someone passing away and leaving another person, family or entity in a worse financial situation then what they were in before the individual passed away. In other words, it helps to ease the financial burden placed on others by the passing of the insured.

It's whole purpose then is to protect persons or parties from the financial hardship that could be created by the unprotected (by life insurance) passing away of an individual. The hardship might be to a surviving spouse, minor children or other dependents, creditors or to a business entity. Life Insurance used properly can be used to protect any of the above parties or anyone else who would be financially hurt by the passing of an individual.

Think of the entire process as effective teamwork but on a massive scale. To more quickly grasp the concept simply start small with the idea of a village of 100 families. Imagine a small village that you are part of and while you know many of the other inhabitants there are nearly as many that you don't know.

Insurance Benefits for Widows and Widowers?

One day one of your neighbors comes around taking a collection for the poor widow Jones whose husband passed last month. It seems there's not much food in the house, no oil for the furnace and the rent is two weeks late. Your neighbor is taking it upon himself to feel sorry for the widow and her children and do what he can to ease his conscience and help a friend. While Mrs. Jones can certainly use the money there is no doubt that pride dictates she does not want anyone feeling sorry for her financial condition.

Realizing that Mrs. Jones is in a very bad position is not a pleasant revelation. Realizing that if you were to pass today your own spouse and children would be in an equally ugly situation in a matter of weeks is equally unpleasant and gets one to start thinking about solutions to this problem that afflicts families every day.

Assisting Surviving Spouses & Families with Insurance

One financially responsible solution that occurs to solution seekers in the village is the idea of each family putting $5.00 in the village fund monthly that is designated for the specific purpose of assisting surviving spouses and family. Once the pot builds to a predetermined level, from that point onward every time a husband or wife, father or mother die, the surviving family members receive a one time payment from the village fund of a predetermined amount.

Doesn't that make excellent sense? No pride is compromised because only those actively participating in the program receive funds. It's not a gift from someone feeling sorry for the survivors but an entitlement based on your prior financial committment to participate.

No one is receiving charity and everyone is paying their own way. Since everyone is adding to the village fund on a regular basis the financial pinch is minimized and those choosing to participate contribute only tiny amounts each month. Obviously a very easy way to ensure that no family has to endure financial hardship through the death of one adding to the family's income.

Think of insurance in these terms and may begin to view insurance as an outstanding way of balancing risk among a group of people so that all benefit no one is giving each month more than they can easily afford.

Total Insurance Know How

There's not great mystery about how life insurance works. You just need a few basic facts..

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