The Blended Approach to Life Insurance

As a business owner you may have multiple people who depend on you.

In the event of your death, life insurance proceeds can help ease the burden left on your business and your family. The death benefit can be used to cover business loans or the mortgage on your family’s home. Having the proper amount of coverage can provide financial stability to those who rely on you most.

Choosing the appropriate type of life insurance depends on an individual’s resources and the length of time that the protection is needed. This timeframe can be influenced by a business loan, the age of your children, or a home mortgage, as well as future goals such as cash flow needs for business growth, college expenses, or retirement needs.

Term life insurance provides protection for a limited period of time — or the “term” of the policy, for example, 10 or 20 years. The death benefit is paid if the insured dies within that specific time period. If the insured outlives the term, the policy ends and no death benefit is paid. Most term insurance policies have a level premium that must be paid for the length of the term in order to keep the policy in force. Term insurance can be an affordable solution for meeting short-term protection needs.

Universal life policies are permanent life insurance policies designed to last for your lifetime. They are often used for longer term personal estate planning and business succession planning. These policies can build cash value over time, which can be used for future planned and unplanned expenses. The cash value grows tax-deferred and can be accessible through loans and withdrawals during your lifetime.

Both types of life insurance pay out a death benefit that is generally income tax-free to the beneficiary of your choice. However, universal life policies have a higher premium than term coverage due to the cash value component and longevity they offer. Building a life insurance portfolio that includes term and permanent insurance can help you afford the amount of coverage you need now and provide you supplemental income later on.

Federated offers both types of policies. Your marketing representative can help you learn more about how they may fit into your long-term business and family goals.

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The Blended Approach to Life Insurance (pdf)

This article is for general information and risk prevention recommendations only and should not be considered legal, coverage, financial, tax, or medical advice. The information may be subject to regulations and restrictions in your state. There is no guarantee following these recommendations will help reduce or eliminate losses. The information is accurate as of its publication date and is subject to change. Qualified counsel should be sought regarding questions specific to your circumstances. All rights reserved.

Published Date:March 16, 2020

Categories: It's Your Life