People from all walks of life, income levels, single and married, buy life insurance.
It is such an essential part of financial planning that Congress has accorded life
insurance a special tax status. There is no federal or state income tax on death
benefits and the increase in cash value in a whole life policy accumulates on a
tax-deferred basis. More than 8 in 10 families in the United States have some form
of life insurance coverage today. Most people who own life insurance are family
breadwinners who want to make sure that in the event they die, the future financial
needs of dependents, such as a spouse, children or elderly parents, are met. However,
people also purchase life insurance to build up cash reserves for a future event,
such as retirement, paying college tuition or estate taxes.
Men and women alike purchase life insurance to protect their families. But in recent
years, women have become a more significant part of the life insurance market. A
growing number of women are heads of households. They purchase life insurance policies,
as homemakers do, to ensure the availability of funds for child care and household
maintenance in the event of their death.