K purchased a life insurance policy in 1986

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In 1986, an individual purchased a life insurance policy, a decision that would have long-lasting implications for their financial security and peace of mind. This article delves into the various aspects of life insurance policies, including their purpose, types, benefits, and considerations. By exploring these factors, we can gain a deeper understanding of the significance of purchasing a life insurance policy in 1986 and how it may have shaped the individual’s financial well-being.

The Purpose of Life Insurance

Financial Protection: Life insurance provides a safety net for individuals and their loved ones in the event of the policyholder’s death. It ensures that dependents are financially supported and can maintain their standard of living even after the policyholder’s demise.

Estate Planning: Life insurance policies can also serve as an essential component of estate planning. They help cover estate taxes and provide liquidity to beneficiaries, allowing for a smooth transfer of assets.

Types of Life Insurance Policies

Term Life Insurance: Term life insurance offers coverage for a specified period, typically ranging from 10 to 30 years. If the policyholder passes away during the term, the beneficiaries receive a death benefit. However, if the policyholder survives the term, the coverage expires without any payout.

Whole Life Insurance: Whole life insurance provides lifelong coverage. It combines a death benefit with a cash value component that accumulates over time. Premiums for whole life insurance policies are generally higher than those for term life insurance due to the added cash value feature.

Universal Life Insurance: Universal life insurance offers flexibility in terms of premiums and death benefits. Policyholders can adjust their premium payments and death benefit amounts within certain limits. Universal life insurance policies also accumulate cash value.

Benefits of Life Insurance

Financial Security: Life insurance policies provide a financial safety net for dependents, ensuring they can cover expenses such as mortgage payments, education costs, and daily living expenses.

Debt Repayment: In the unfortunate event of the policyholder’s death, life insurance can be used to pay off outstanding debts, such as mortgages, loans, and credit card balances. This prevents the burden of debt from falling on the shoulders of surviving family members.

Business Continuity: Life insurance can also play a crucial role in business succession planning. It can provide funds to buy out a deceased partner’s share, ensuring the smooth continuation of the business.

Considerations for Life Insurance Policies

Premiums: When purchasing a life insurance policy, it is important to consider the affordability of the premiums. Premiums can vary based on factors such as age, health, and coverage amount. It is crucial to choose a policy that fits within one’s budget.

Policy Coverage: Assessing the coverage amount required is essential. Factors such as outstanding debts, future financial goals, and the needs of dependents should be taken into account when determining the appropriate coverage.

Policy Riders: Policyholders may have the option to add riders to their life insurance policies for additional coverage. Riders can include features such as accelerated death benefits, which allow policyholders to access a portion of the death benefit if diagnosed with a terminal illness.


Purchasing a life insurance policy in 1986 was a significant step towards securing financial protection and peace of mind for the individual and their loved ones. Life insurance policies serve as a crucial tool for providing financial security, estate planning, and business continuity. Understanding the purpose, types, benefits, and considerations of life insurance policies is essential when making informed decisions about coverage.


– Investopedia: www.investopedia.com/life-insurance
– The Balance: www.thebalance.com/life-insurance-4073967
– Policygenius: www.policygenius.com/life-insurance