Life insurance is a key financial asset that serves a wide variety of purposes, providing financial support to heirs and charitable organizations, indemnification against the loss of a key person in your business, funding of a business continuation plan, and as a benefit for executives and employees. Additionally, life insurance offers a unique combination of liquidity, leverage and flexibility, and tax-reduction.
All life insurance policies fall into one of two general categories: Term or “Perm”, aka Permanent.
TERM LIFE INSURANCE—temporary, providing protection for a set period.
Convertible Term: the term policy’s annual premium is level for a period of 10, 20 and 30 years, but the policy is fully convertible to permanent insurance if needed.
CASH VALUE LIFE INSURANCE—can provide permanent protection and involves an internal tax-advantaged savings component.
Cash value life insurance, also referred to as permanent coverage, differs from term because the premiums paid are sufficient to cover the expenses of the policy plus build a cash value within the contract. Cash value accumulation in a life insurance policy may produce more favorable long-term results, helping to achieve a wide range of financial objectives including:
- Paying off a home
- Providing a down payment to purchase real estate
- Buying or funding a business
- Funding college expenses
- Tax Advantages
- Protection from a market downturn
- Multiple forms of leverage including “Premium Financing”
- Avoidance of probate
- Estate planning
- Legacy planning
- Employee benefits
- Key Man Insurance
- Executive bonus plans
- Charitable giving
- Tax-Free retirement income…And so much more…