Life
insurance has a number of uses, but primarily it enables a person to leave
money to a loved one to make sure that their estate, debts, obligations
are settled and that the survivor can live on at the same standard of living.
Premiums depend primarily on health, age, sex, and whether or not the applicant
smokes or not. Some of the other uses of life insurance include creating
an estate , estate planning, business continuation, buy sell agreements,
emergency funds, additional retirement income, covering a loan, making
sure children can receive a college education, and key person coverage,
just to name a few. For business purposes, life insurance has many uses
some of which are listed.
Each person has a reason for needing life insurance, your agent needs
to perform a thorough fact find to help you to realize the amount and type
of insurance needed to fulfill your obligations. Permanent insurance can
be whole life, universal life, variable life, or adjustable life, all of
which are designed to last until the insureds death whatever age that may
be. Term insurance can be either annual renewable or level for a specified
period of time, but it is not designed to be used to cover lifetime obligations.
Each type has it's place, make sure you understand how each works before
you make a decision on what to purchase.
ESTATE PLANNING
Estate planning is the method of transferring assets at death. The concern
is how much of the estate will be transferred to the government. With proper
estate planning those taxes will be minimized or paid for with assets outside
the estate such as trusts. Proper planning consists of an attorney, an
accountant, a trust officer possibly, and an insurance agent. Majority
of the planning consists of transferring ownership of assets to minimize
taxes, then providing the funding to pay the unavoidable taxes. Taxes on
the federal level can be as high as 55% of the estate. Most people with
an estate of over $600,000. , have a real concern. Working all those years
to accumulate assets, only to have the government take a large share before
you children get anything. Full planning consists of a full fact find complete
with a history of tax returns and a copy of all legal and financial documents.
BUSINESS PLANNING
Business planning consists of not only everything listed above ,but
continuation of the business, executive bonus plans, and key person benefits.
This enables the business owner to make sure that the business carries
on even after he stops, either from retirement, death, or disability. Also,
due to the laws governing certain retirement plans, owners tend not to
be able to put away as much money as necessary for retirement in their
company plans. Executive bonus plans enable the owner of the business to
put money away without having to contribute to the employees retirement.
Key person coverage allows the owner of a business to cover an employee
whose service is invaluable. How would the business carry on without their
top sales person, or their specialists? Would there be a drop in profits,
if they left the business? These are important considerations from business
owners.