GETTING STARTED
The first step in purchasing life insurance is deciding whether you will purchase the insurance yourself or use the advice and help of a life insurance professional. If you decide to purchase the insurance yourself, you can do so through a variety of Internet providers. You should also consult with either your attorney or accountant regarding the ownership structure and what type of insurance to purchase.
If you decide to purchase life insurance with an insurance professional, he or she will help you decide on the type of insurance, the appropriate ownership of the insurance, how much insurance to purchase and how to structure the policy to provide you the benefit you want and need. The product is complicated and you should strongly consider working with a professional. Those who don't work with life insurance on a regular basis will often make mistakes that a seasoned and honest insurance professional won't.
STEP 1. Choose a life insurance professional.
If you decide to use a life insurance professional, choosing the correct one is the most important step in helping you achieve your life insurance goals. You should consider a life insurance agent with the following criteria:
* Extensive experience in the life insurance business (at least five years).
* A positive reputation in the community.
* A designation such that shows competence with life insurance such as CLU (Charted Life Insurance Underwriter) ChFC (Chartered Financial Consultant), CFP® (Certified Financial Planner).
* Extensive experience working with private business owners in solving risk management, asset protection and wealth transfer engagements.
* An ability to understand your goals and provide solutions that don't always include life insurance (for example, using a "529 college plan" to finance a college education instead of using a cash value life insurance product).
Home Business Insurance
For more on types of insurance available, see the Inc.com guide, How to Choose Business Insurance.
STEP 2. Develop clarity about what you want the insurance to do.
Once you understand what the insurance will do, you and your advisor can decide who should own the insurance and how the insurance premiums should be paid.
Common uses and ownership of insurance are as follows: Use: Death benefit funds business continuation. (Key man insurance) Owner: Business
Use: Proceeds used to purchase your business share from your surviving family members. (Buy/sell insurance) Owner: Business or Business Partners
Use: Proceeds provide living income for surviving family members. (Family risk insurance) Owner: Trust outside the business or spouse
Use: Supplemental retirement savings Owner: Trust outside the business policy holder, or spouse
Use: Estate tax funding. (Wealth transfer insurance) Owner: Life insurance trust
Understanding the use will help you decide which type of insurance to choose.
http://www.inc.co m/business-insurance/articles/ how-to-choose-life-insurance.h tml
Answered by
Om Prakash
, an ibibo Master,
at
1:32 PM on September 15, 2008
