A personal loss exposure can be defined as any condition or situation that presents the possibility of a direct financial loss to a human being. Specific personal loss exposures can result in considerable financial difficulty for individuals and their family members. Significant personal loss exposures include premature death, poor health, unemployment, and insufficient income during retirement. Personal loss exposures can be reduced or even eliminated by life and health insurance, disability income insurance, private and public retirement plans, and an efficient saving and investing program.
All life insurance contracts include pure protection against the risk of premature death. It is the loss of life that triggers the payment of the benefit. Life insurance may be used to fulfill several personal and family needs. With life insurance, the death of the insured creates an immediate estate for the benefit of the insured’s family.
LIFE INSURANCE IS NOT JUST LIFE INSURANCE – The need to cover expenses and replace lost family income due to early death is the main reason that people purchase life insurance protection. Still, it is not the only reason to buy life insurance products. Initially, life insurance contracts only provided death benefits. That has changed. Today, many forms of life insurance include other types of benefits. Most people also buy life insurance to protect against the risk of living for a long time or outliving their financial resources. Life insurance is usually associated with death; however, life insurance may be used to treat two exposures: dying too soon and living too long.