Using Life Insurance to Solve Family Problems.

Yesterday, there was an interesting article in the Chinese newspapers. The author wrote that while life insurance is so common today, it is also the least understood financial product (or the most mis-understood product). I agree with this statement, and would like to re-introduce life insurance to you.

Life insurance is a financial product that primarily creates capital and provide liquidity to solve certain family OR business problems. I will illustrate the family problems first.

The following is a list of ways in which life insurance can help solve family problems:

1. Financing a child's education
2. Underwriting a saving program
3. Building retirement income
4. Guaranteeing that children will have income during years of dependency
5. Guaranteeing that a spouse will have income for the balance of his/her life
6. Guaranteeing that a mortgage on a home will be paid off
7. Guaranteeing a lease obligation
8. Underwriting that additional tax liabilities that will accrue upon the death of a spouse
9. Guaranteeing the capital accumulation an employee expects to receive upon the vesting or payout of a profit-sharing account
10. Guaranteeing the future profits an executive expects to realise from a stock option or executive bonus plan
11. Guaranteeing gifts or bequests to a church, school, or chaity
12. Guaranteeing the transfer of existing capital to children while releasing funds for spending or risk investments.
13. Funding estate duty liabilities
14. Accumulating capital in a trust for children, parents, or grandchildren
15. Accumulating a secure, creditor proof investment return
16. Underwriting the money value of a housewife to the household.

Source: Life Insurance Desk Book, Institute for Business Planning (IBP), Research and Editorial Staff.