Life Insurance

Life insurance is among the most useful, and most maligned, of all the purchases that you will ever make. If properly fitted to your needs and purchased at a competitive price, life insurance offers important advantages, including:

• income replacement for your survivors;
• investment/forced savings for you;
• reduced income and transfer tax liability;
• a ready source of cash at a time when it's likely to be needed most; and
• funding of small business buy/sell agreements.

So, if life insurance can offer all of the above advantages, why aren't there long lines of people outside their insurance agent's office, demanding to buy more? Probably because people fear that one or more of following scary things may come true:

• the policy will be overpriced when compared to similar policies offered by other companies;
• the policy will offer poor investment returns;
• the policy will not enjoy all possible tax advantages;
• the policy will not function as planned to facilitate a buy/sell agreement; or
• the policy will be sold by an unethical insurance agent who will try to sell the individual the highest premium policy possible, whether it meets the individual's needs or not.

Besides these possible financial disadvantages, there are some emotional factors that may keep people from buying needed life insurance:

• by their nature, life insurance policies require current outlay for an expected advantage in the future (which may never be seen by the policyholder, only his or her beneficiaries) and
• many people remain uncomfortable about thinking of their deaths

In order to make sure that you, as a present or prospective business owner, receive the advantages and avoid the possible pitfalls associated with life insurance, we suggest that you look at the following discussions:

• term or cash value policies?
• comparison table of common types of insurance policies
• common provisions and terms of life insurance policies
• small business ownership factors that influence life insurance needs