All of the following are personal uses of life insurance EXCEPT.

All of the following are personal uses of life insurance EXCEPT.

 Select one:

a. Cash for funeral costs and related expenses

b. College education for surviving children

c. To protect a corporation from the financial loss sustained when a key employee dies.

d. Peace of mind and financial security for a family

Answer: c. To protect a corporation from the financial loss sustained when a key employee dies.

Life insurance primarily functions to ensure financial materialization against unfortunate loss. The main personal uses of life insurance are:

Option a ) To cover death-related expenses such as funeral and burial fees. With life insurance, you get cash on demand to pay these expenses without having the family members struggle at a time of grieving during their loss.

Option b) To finance college education for surviving children. Kids can continue their pursuit of higher education despite the death benefit from a life insurance policy being used to pay for future college costs.

Option d) To provide replaced income and future financial stability. In life insurance, a one-time payment is made to replace the income of the deceased in order to preserve family welfare standard. It helps ensure financial stability.

But life insurance is rarely used in order to insure a corporation against the loss of its best employee. Although firms may take out “key person” life insurance policies on essential staff, this is classified as a business expense and not personal use of the practice. The aim does not have anything to do with providing benefits for individual or family but securing the company from losing finances . This solution would not be a private life insurance use.

Overall, the primary personal benefits of life insurance are final expense coverage, children’s education funding and financial protection for a household. By protecting a corporation, it is the business use of life insurance and not personal.