Who Can Benefit from Term Life Insurance?

By Tes Kurtz on December 18th, 2009

Term life insurance is the most basic form of life insurance. It's affordable life insurance at a fixed rate, which you can get for a specific period of time ranging from 1 year up to 30 years. Although it holds no cash value for the insured, term life insurance coverage provides large death benefits to those left behind. Term life pays the designated beneficiary upon the insured's death, income tax-free.

Term Life Policies for Different Needs

Who can benefit from buying term life insurance? There are many situations in which individuals might want term life coverage. Key candidates include:

  • Young families. If you are just building your career and income, you can still purchase large death benefits without a large premium. Term life coverage in this case will protect your family financially, just in case the unthinkable happens. Upon expiration, some term life insurance policies can be converted to a permanent plan carrying a cash value, which could be used toward your children's education, such as for college tuition.
  • Business partners. Do you run a business with a partner? If something happened to your partner, could your business survive? It is likely that your partner's expertise is complementary to yours and critical to the success and profitability of your enterprise. Term life insurance provides the surviving partner with time and money to find and train another person--enabling your business to continue to thrive.
  • Family-run businesses. Many small businesses stay in the family, but not all family members want to be part of the business. Let's say you run a sporting goods store and have three children. Only one of the three is involved in running the store and wants to take over the operation after you retire. The worst-case scenario is that you pass away before reaching retirement. A Buy-Sell Agreement (a type of term life insurance policy) would enable your surviving children to evenly distribute the inheritance, while at the same time ensuring that the child who worked for you becomes the owner of the business--fairly buying out her siblings' shares.
  • Business owners with VIP personnel. There are a couple of possibilities here:
    • Term life insurance to benefit the business owner. If you are a business owner with valuable, high-ranking employees, you can purchase a type of term life policy for each that is referred to as Key Person Insurance. You serve as the payer and the beneficiary. If something happens to an executive that you have insured under this form of low-cost life insurance, you are provided funds that will enable you to find and train a replacement.
    • Term life insurance to benefit top executives. As a business owner, you can purchase term life insurance as part of a benefits package. The length of the policy might be for as many years as that executive plans to be at your company--perhaps until he or she plans to retire. You serve as the payer, and the benefits go to your top executive's family should something happen to him or her.

Obtaining Term Life Insurance Quotes Online

Do any of these scenarios fit you? You can get competing term life insurance quotes from providers with no commitment. Just enter your zip code and then fill out the brief, secure form to obtain free insurance quotes.

Source :
Devonna Wilhelmi, Life Insurance Expert • Telephone Interview
N/A • How Can You Protect Your Business and Family? • Dec 31, 1969 • http://www.newyorklife.com
Key Person Insurance Explained • Dec 31, 1969 • http://www.gaebler.comhttp://www.gaebler.com/Key-Person-Insurance.htm

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