At long last, we enter into the oft-requested topic of life insurance! Today's show is an introduction to the economic basis and justification for life insurance and it's also an outline of some of the uses of life insurance for individuals and families. (We'll cover business uses another day.)
You also get the joy of a bit of a sales pitch on why I love life insurance planning so much. It's truly an incredible financial product.
Life insurance is founded on the economic value that each of us provide to others and on our moral obligation to provide for our dependents.
Because each of us has an economic value that can be estimated, we can come up with some formulas to understand how much life insurance is appropriate.
The three major approaches to determining an appropriate amount of life insurance are:

Human life value approach
Needs analysis approach
Rule of thumb approach (most popular is the multiple of income approach)

The best of these methods is the needs analysis approach. It balances the need for precision and the need for simplicity quite effectively.
Life insurance can have many uses for individuals and families:

Immediate funds:

Cash to meet daily living needs
Cash to pay expenses associated with death
Cash for emergencies, repairs, or replacements


Ongoing income:

Spouse
Children
Parents
Nondependents


Funds to pay debts
Funds for death taxes
Funds for dependents' education
Funds for trusts
Funds for charities
Funds for gifts
Funds to supplement retirement income
Funds for home health care or nursing home care
Funds to transfer assets to a younger generation
Funds to discreetly provide for confidential needs

Enjoy the show!
Joshua

Support Radical Personal Finance! http://radicalpersonalfinance.com/patron