Monday, 25 November 2019

Having the right insurance coverage is key to your financial well being. In fact, smart insurance planning can help protect your wealth, your family and your business.  

But insurance isn't always easy to understand. For example, what's the difference between term and permanent life insurance? What does long-term care insurance cover? And how does life insurance factor into long-term business planning?

Truth is, knowing how insurance works can help you make the best possible decisions when it comes to protecting what matters most to you. So, here are some insurance coverage terms for individuals and businesses to help you get started.

Personal Insurance

Disability Insurance

Disability insurance provides income if you become disabled and can't work. You can purchase disability insurance from any number of companies, but first see if you can buy it through your employer or professional association.

Accidental Death and Dismemberment Insurance (AD&D)

This type of policy provides payment to the beneficiary if the policyholder dies or is dismembered in an accident.

Estate Planning

Estate plans specify what happens to a person's assets when they pass. Most estate plans include wills, trusts and other financial tools. Life insurance is often included in estate plans and the death benefit is used to pay for estate taxes and business transitions.

Long-Term Care Insurance

Long-term care insurance pays medical bills and other costs from long-term illnesses such as Alzheimer's, strokes and more.

Term Life Insurance

With this type of life insurance, you pay the same amount each year and get coverage for a specific term. The death benefit is only available during this term. Term policies accumulate no cash value but are often the most affordable way to buy life insurance.

Permanent Life Insurance

Permanent life insurance provides coverage until the policyholder's death. It includes a death benefit and accumulates cash value. Whole and universal life are the two most common types of permanent life insurance.

Whole Life Insurance

Whole life provides coverage for the policyholder's lifetime. The policyholder pays the same amount each year and the policy's cash value increases at a guaranteed rate.

Universal Life Insurance

Universal life provides coverage for life and builds cash value. Universal life policies offer more flexible premiums, death benefits and cash-growth options.

Life Insurance – Final Expenses

Final expense insurance covers medical bills and funeral expenses upon the policyholder's death. Premiums are usually fixed and build cash value.

Business Insurance

Key Executive Life Insurance

Provides a death benefit to the business after an unexpected death of a top executive. 

Buy-Sell Agreement Life Insurance

A buy-sell agreement is contract between business owners that states what will happen if one of the co-owners dies or leaves the business. Some buy-sell agreements include life insurance and the other owners use the death benefit to purchase the deceased owner's part of the business.

Business Succession Life Insurance

Most businesses have a plan for passing ownership on to others when current owners leave the business. When an owner dies, the new owners use the life insurance death benefit to buy out the deceased owner's part of the business.

Learn more about important personal financial topics by checking out the other stories in this series including:

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