Term Life Insurance
Term life insurance is considered to be the most basic form of life insurance protection. This is because it provides death benefit coverage only, with no cash value. Because of this, term life is typically very affordable for most people. Policies can be purchased for a set period of time such as 5, 10, 20, or even 30 years, making these policies an ideal way to cover needs such as paying off a mortgage balance or ensuring that a child’s future college education is funded should the insured pass away while the policy is in force.
Whole Life Insurance
Whole life is a type of permanent life insurance. This type of coverage offers death benefit protection, along with a cash value component that allows the policy holder to build savings on a tax-deferred basis. This means that there is no tax due on the growth until the time of withdrawal.
The cash value grows at a guaranteed rate of return that is set by the insurance company. Funds from the policy’s cash account may also be borrowed or withdrawn. A whole life insurance policy has no set time limit, so the coverage will remain in force as long as the premium is paid.
Universal Life Insurance
Universal life insurance is also a form of permanent protection. It, too, offers both a death benefit and a cash value component. However, universal life offers an additional level of flexibility in that the policy holder can decide, within certain limits, when to make premium payments, as well as how much to pay into the policy. You may also be able to decide how much of your policy’s premium goes towards the death benefit and how much goes into the cash value component.
Survivorship Life Insurance
Survivorship life insurance policies will typically cover more than one insured. With this type of coverage, the proceeds are usually paid out following the death of the second person. Often, survivorship life insurance policies are used by married couples for estate planning or other similar strategies.
Executive Plans
If your company has specific employees that the business depends largely upon, there are various benefits that may be offered to those individuals that can be advantageous to them, as well as to the company should the unexpected occur. These could include:
- Key Employee Life & Disability – With key employee life and disability insurance, a company can be protected in the event of the sudden death or disablement of a prominent figure in the business. This can be, for instance, a top sales performer or someone who performs some other high profile role. In the case of life insurance, for instance, the company will usually purchase the policy, and it will also be named as the beneficiary so as to receive the policy’s proceeds. These funds can be used to cover the cost of finding and training a replacement for the deceased key employee should that person pass away.
- Buy / Sell Insurance – A buy / sell agreement is a contract between two or more owners of a business. When there are two or more key individuals, the sudden loss of one of them could devastate the entire company. With this type of arrangement, should one of the owners pass away, the proceeds from his or her policy will be able to provide the necessary funds for the surviving owner (or owners) to purchase the deceased owner’s portion of the company. These funds can basically allow the company to survive and continue operating during the time of transition.