USING LIFE INSURANCE TO MAKE EQUITABLE TRANSFERS ... Using Guideline Company Data to Estimate Value (the ... Multiple of Discretionary Earnings Method. Rules of Thumb. ... In particular, the changes reflect the need to ensure ... Rights to benefit from a foreign life insurance policy. ... In practice, the default calculation method rules give the Use the same material for your business valuations that ... valuation experts to give you all of the guidance you need ... Detailed Work Program.

Answered by Om Prakash , an ibibo Master, at 5:59 PM on September 22, 2008

USING LIFE INSURANCE TO MAKE EQUITABLE TRANSFERS ... Using Guideline Company Data to Estimate Value (the ... Multiple of Discretionary Earnings Method. Rules of Thumb. ... In particular, the changes reflect the need to ensure ... Rights to benefit from a foreign life insurance policy. ... In practice, the default calculation method rules give the Use the same material for your business valuations that ... valuation experts to give you all of the guidance you need ... Detailed Work Program. Develop a Time and Fee Estimate

Answered by Vipan Thapar , an ibibo Master, at 3:09 PM on September 22, 2008

FAQs - Life Insurance

* Why do I need life insurance?
* Why do business owners need life insurance?
* How much life insurance do I need?
* How do I choose an agent?
* What should I expect from my insurance agent?
* Will a medical exam be required?
* Should I purchase insurance on my spouse?
* Once my insurance policy is issued, can the insurance company cancel my contract if I develop medical problems?
* Will my beneficiary have to pay income tax on the life insurance death proceeds when I die?
* May I change the beneficiary on my life insurance policy?
* Why did my insurance cost more than what I was originally quoted when I applied for the coverage?
* Why buy insurance from First Tennessee Insurance Services, Inc.?

Why do I need life insurance?
Life insurance is an important part of financial planning and plays a valuable role during various stages of life. Some examples are:

* To pay off the mortgage and other debts.
* To provide funds survivors can access to replace lost income resulting from the death of the breadwinner.
* To provide funds for funeral expenses and other final expenses (any hospital or doctor bills that may not be covered by health insurance).
* To provide an education fund for children or to further the education of the surviving spouse or other adult beneficiary.
* To provide funds for special needs children.

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Why do business owners need life insurance?
Life insurance plays a key role in business financial planning. Life insurance may provide funds for businesses to:

* Pay off business loans upon the death of the insured
* Provide funds to recruit and train new management
* Provide funds to hire consultants to replace lost talent
* Purchase the deceased partner's interest from his/her family
* Provide a vehicle for key employees to defer income on a tax-advantaged basis.

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How much life insurance do I need?
To help answer this question, you should assemble personal financial information and determine the amount your family will need to support them financially at your death. In addition to these first steps, there are a number of factors to consider when determining how much life insurance you need. These include:

* Any immediate needs at your death (funeral expenses, estate taxes, final illness expenses)
* Family needs
* Day care costs, college tuition
* Debt cancellation

In most situations, the best way to help you evaluate your situation is through a consultation with a licensed insurance agent.
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How do I choose an agent?
Recommendations from friends, family, financial institutions you trust, or other sources are methods you can use to select an agent. When selecting an agent, you should ask these questions:

* Is he or she licensed to sell insurance in your state?
* If you are interested in variable life products, is he or she also registered with the National Association of Securities Dealers ( FINRA) and licensed with your state's securities authority.
* Does the agent represent the quality companies you deserve?
* Does the agent have professional designations? (e.g. Chartered Life Underwriter (CLU); Life Underwriter Training Council Fellow (LUTCF); Chartered Financial Consultant (ChFC); Certified Financial Planner (CFP).
* Is he or she a member of a professional association? (e.g. National Association of Insurance and Financial Advisors (NAIFA); American Society of CLU & ChFC; Financial Planning Association (FPA).

In addition to these questions, you may have others you would like answered. These guidelines should help you select an agent to help you evaluate your need for insurance.

Answered by Ashwani , an ibibo Master, at 11:55 AM on September 20, 2008

There are several simple methods available to broadly estimate your life insurance needs. Five simple rules are:

1. Income rule

The most basic rule of thumb is provided by the income rule which holds that individual insurance cover should be at least around eight to ten times one's gross annual income. For example, a person earning a gross annual income of Rs 1 lakh should have about Rs 8 to10 lakh in life insurance cover.

2. Income plus expenses rule

This rule suggests that an individual needs insurance equal to five times your gross annual income, plus the total of basic expenses like housing or car loans, personal debt, child's education, etc.

3. Premiums as percentage of income

By this rule, payment of insurance premium depends on disposable income. In other words, one should decide the quantum of insurance after meeting the regular outgo from salary.

From the first two rules, you can make a broad estimate of the minimum insurance you should have. The premium as percentage of income rule can help you fine-tune your cash flow by committing an appropriate percentage of your income for paying life insurance premium.

4. Capital fund rule

This rule suggests that if you need Rs 1 lakh p.a. for your family needs, and assuming you do not have any other income-generating assets, you may like to create a capital fund of Rs 12.5 lakh (Rs 1.25 million) which can yield Rs 1 lakh (Rs 100,000) annual income @ 8% p.a. You may therefore buy a life insurance policy of Rs 12.5 lakh.

5. Family needs approach

This rule holds that you purchase enough life insurance to enable your family to meet various expenses in the event of key earning person's death. Under the family needs approach, one has to divide his family's needs into two main categories: immediate needs at death (cash needs), and ongoing needs (net income needs).

Stage of Life==============Needs =========================Asset s

Initial stage. No family responsibilities.==========Pre mature death leads to minimal needs like funeral expenses=======No worthwhile assets. Just a beginning. May be some cash balance.

Married, with children.==========Premature death causes serious financial problems, as most of the needs continue====Some assets available. Growing assets

Empty nest==========The needs decline once children grow up and get settled. No major financial problems===============Strong assets base, surpassing the financial needs

You may also like to keep in mind that if your family is reasonably wealthy and its protection needs relatively low, you can buy a smaller amount of insurance. Similarly, if your family members have independent earning capacity you may reduce your insurance.

There is a broad relationship between needs and assets over a period of time. Thus, not much life insurance is needed in the initial stage. The same is true in the empty nest stage.

The maximum need for life insurance arises during the mid-phase, when one is married and has children. In other words, one may go for life insurance so long as the asset-level is lower than the need-level.

Answered by Nagendra , an ibibo Master, at 8:52 AM on September 20, 2008