1. WHO WILL BE THE OWNER OF THE POLICY?
Life insurance proceeds are included in the estate of a deceased
if he or she has any "incidents of ownership"
in the prolicy. Ownership by an adult children or an Irrevocable
Life Insurance Trust should be considered if there is an estate
tax problem.
2. HOW MUCH LIF INSURANCE?
this will depend on the need it is fulfilling. Amounts needed
to fund a business transfer or to pay death taxes may be readily
determined.
Calculating the value of a human life to a family is more
difficult. Consider these projected total earnings up to
age 65 assuming a 5% annual increase including inflation.
35 45 55 | 1,674,259 833,262 316,963 | 3,348,518 1,666,524 633,926 | 6,697,036 3,333,048 1,267,852 |
3. WHAT TYPE OF POLICY SHOULD BE PURCHASED? A person trained in life insurance can explain the many different policies available and assist in selecting the one which best fits your needs.
4. HOW SHOULD THE PREMIUM BE PAID? Sometimes the amount of the premium can be paid from current income, while other times it may be prudent to reposition other assets so as to be able to acquire sufficient insurance protection.
If the insured is a business owner or executive, a corporation may assist in paying premiums through a split-dollar arrangement. Other times it may be better to have the corporation own the policy and use the proceeds to purchase part or all of the owner's interest at death.
Insurance can also be purchased in certain qualified retirement plans.