There have been many jokes, skits and examples of life insurance salesmen over the years. After the laughing, people do generally agree that we all have a need for life insurance of some form. The type of insurance you require is dependent on your business, personal and financial needs. As your business and personal life changes, your life insurance coverage may need to be updated to adapt to your new situations. When choosing your policies, make sure you work with a knowledgeable insurance professional. Some types of life insurance which may meet your needs are listed and defined below:
- Term Life Insurance provides protection for a specified period of time. The initial cost for this type of coverage is low. Depending on your age and health, you can guarantee your rates for periods of up to 30 years. Another nice feature is that these policies can be easily converted into permanent coverage and may be cancelled at any time without penalty.
- Permanent Life Insurance consists of a variety of types of coverage from fully-guaranteed premiums, values and death benefits to complete flexibility of premiums, interest rates and death benefits. Some of the titles you may be familiar with are whole life, variable life and universal life.
- Last Survivor Life Insurance is a policy that is used in estate planning to help deal with estate taxes. This policy is written for married couples and can be useful for couples in which one or both spouses have medical issues, making insurability difficult.
- Buy-Sell Life Insurance is used by many businesses to ensure the successful transition of shares of stock of a corporation when an owner dies. Along with a document drafted by your attorney, this insurance can fund the purchase of the corporation from the deceased estate.
- Key Person Insurance allows an employer to purchase a policy on an employee who is crucial to the success of the company. If a company would be financially impacted by the death of an employee, with his/her consent, the company can purchase a policy to offset the financial loss in the event that they should pass away. (Remember that life insurance insurability is very different from property and casualty insurability. When it comes to life insurance, a person must show that he/she has a financial interest in another person’s life at the time a policy is originally purchased, not at the time of a claim.)
Life insurance is a very valuable product which can be extremely complicated. Because the claims process will only happen one time, it is necessary that the policy be written correctly. Make sure you spend time with your insurance professional to periodically review your life insurance needs. Times and exposures change, requiring your life insurance to change as well. IBI