Life Insurance
Introduction
In general, life insurance is a type of coverage that pays benefits upon a person 's death or disability. In exchange for relatively small premiums paid in the present, the policy holder receives the assurance that a larger amount of money will be available in the future to help his or her beneficiaries pay debts and funeral expenses. Some forms of life insurance can also be used as a tax-deferred investment to provide funds during a person 's lifetime for retirement or everyday living expenses.
A small business might provide life insurance to its workers as a tax-deductible employee benefit—like health insurance and retirement programs—in order to compete with larger companies in attracting and retaining qualified employees. In addition, there are a number of specialized life insurance plans that allow small business owners to reduce the impact of estate taxes on their heirs and protect their businesses against the loss of a key employee, partner, or stockholder. Group life insurance is generally inexpensive and is often packaged with health insurance for a small additional fee. Companies that provide life insurance for their employees can deduct the cost of the policies for tax purposes, except when the company itself is named as the beneficiary.
Life insurance is important for individuals as well, particularly those who—like many entrepreneurs—are not covered by a company 's group plan. Experts recommend that every adult purchase a minimum amount of life insurance, at least enough to cover their debts and burial expenses so that these costs do not fall upon their family members. The insurance industry uses a standard of five time’s annual income in estimating how much coverage an individual should purchase. In her book Health Insurance: A Guide for Artists, Consultants, Entrepreneurs, and Other Self-Employed, Lenore Janecek claims that entrepreneurs should determine the minimum amount of coverage they need by calculating how much they spend
In general, life insurance is a type of coverage that pays benefits upon a person 's death or disability. In exchange for relatively small premiums paid in the present, the policy holder receives the assurance that a larger amount of money will be available in the future to help his or her beneficiaries pay debts and funeral expenses. Some forms of life insurance can also be used as a tax-deferred investment to provide funds during a person 's lifetime for retirement or everyday living expenses.
A small business might provide life insurance to its workers as a tax-deductible employee benefit—like health insurance and retirement programs—in order to compete with larger companies in attracting and retaining qualified employees. In addition, there are a number of specialized life insurance plans that allow small business owners to reduce the impact of estate taxes on their heirs and protect their businesses against the loss of a key employee, partner, or stockholder. Group life insurance is generally inexpensive and is often packaged with health insurance for a small additional fee. Companies that provide life insurance for their employees can deduct the cost of the policies for tax purposes, except when the company itself is named as the beneficiary.
Life insurance is important for individuals as well, particularly those who—like many entrepreneurs—are not covered by a company 's group plan. Experts recommend that every adult purchase a minimum amount of life insurance, at least enough to cover their debts and burial expenses so that these costs do not fall upon their family members. The insurance industry uses a standard of five time’s annual income in estimating how much coverage an individual should purchase. In her book Health Insurance: A Guide for Artists, Consultants, Entrepreneurs, and Other Self-Employed, Lenore Janecek claims that entrepreneurs should determine the minimum amount of coverage they need by calculating how much they spend
References: 4. ^ "AAA/SOA Review of the Interim Mortality Tables Developed by Tillinghast and Proposed for Use by the ACLI from the Joint American Academy of Actuaries/Society of Actuaries Review Team" August 29, 2006 5 16. ^ "Two Elderly Women Indicted on Fraud Charges in Deaths of LA Hit-Run". Insurance Journal. June 1, 2006. http://www.insurancejournal.com/news/west/2006/06/01/69022.htm. Sources