Life insurance helps protect the financial security of your family in the event of your untimely death. This is especially important when you are the primary wage earner.
Currently there are five specific reasons to buy a life insurance policy:
Although often mistakenly viewed as a price only decision, the long term nature of life insurance necessitates careful consideration in the selection of the Life Insurance Carrier, the product type and the agent chosen to represent you and interact with your heirs.
Proceeds from a life insurance policy paid because of the death of the insured are generally excludable from the beneficiary's gross income for federal income tax purposes. IRC Sec. 101(a)(1).
For More Information
Contact a financial service professional at 800-444-1974 to ensure that you and your family has the right level of life insurance.
Why buy life insurance?
Currently there are five specific reasons to buy a life insurance policy:
- To protect your beneficiaries' home and livelihood.
- To replace your income & minimize your heirs debt.
- To provide beneficiaries with income tax-free death benefits.
- To provide the cash to pay any tax on your estate.
- To help protect the value of your estate.
Although often mistakenly viewed as a price only decision, the long term nature of life insurance necessitates careful consideration in the selection of the Life Insurance Carrier, the product type and the agent chosen to represent you and interact with your heirs.
What Should You Consider when Purchasing Life Insurance?
- It can be an essential part of sine financial plans.
- It is an income-tax-free death benefit.
- Your insurance and financial goals determine the amount to purchase.
- It helps ensure that your dependents are financially secure.
- Generally, the younger and healthier you are when you purchase life insurance, the less it will cost you to purchase a policy.
- Life insurance needs should be reevaluated when major events occur in life such as marriage, the birth of children or a business startup.
Proceeds from a life insurance policy paid because of the death of the insured are generally excludable from the beneficiary's gross income for federal income tax purposes. IRC Sec. 101(a)(1).
What are the Purposes of Life Insurance?
Life insurance may be used in many personal, business and charitable contexts. Some of the most common uses are:| For the Business & Owners | For Personal & For the Family | For Charity |
| Key Employee: provide funds to aid in the search and training for a replacement in the event of the death of a key employee. Executive Recruitment and Retention: used to provide a variety of non-qualified benefit programs to help attract and retain key employees. Business Continuation: provide funds to aid in the continuation of business in the event of the death of a key revenue generator. Succession Planning: provides liquidity to purchase the ownership interest of a deceased owner. |
Family Protection: provides a source of cash for surviving family members to use for living expenses. College Funding: provides a funding source for college education for children or grandchildren. Wealth Creation: provides funds to leave as an inheritance or to equalize inheritances among family members. Estate Tax Liquidity: creates liquidity to pay estate taxes rather than requiring liquidation of existing estate assets. Gifting Leverage: leverages the use of the annual gift tax exclusion, the applicable exclusion, and/or Generation Skipping Transfer Tax exemption. |
Wealth Replacement: used with many charitable gifting programs to replace the value of estate assets that were gifted to charity. Gift Creation: used to create a significant donation to charity at death. Gift Leverage: used to maximize the eventual charitable donation at the death of the insured. |
For More Information
Contact a financial service professional at 800-444-1974 to ensure that you and your family has the right level of life insurance.