Update Sept. 02 - 2010 All About "Business Life Insurance" Information By Insurance Experts

It is important that people own a business understand what is business insurance, so they can protect their business in case of any unforeseen event happened causing hardship to the business owner and their family such as business store burned down one day, if you don't carry insurance, you would endured some hard times after that. You make sure you have insurance for anything importance, or anything that could prevent you from earning a living.

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What Happens If My Life Insurance Company Goes Out of Business?
By Ed Hinerman

Fair question - since over the past ten years we have seen some shocking things happen in business. Highly rated, highly respected companies biting the dust. What about Enron? Not an insurance company, but poor management of a large trusted company.
So, what if it had been an insurance company? What if it had been a life insurance company where you happened to have all of your family protection? What if it happened to be the company that had sworn it would fend off disaster for your family if you were to die prematurely? Enron just disappeared. Poof! Gone! Is that the same thing that happens when an insurance company goes under?
The good new is the answer is no. There really isn't any way to compare Enron with, say, Empire General went out of business a few years ago. A lot of my clients had policies with them so I got a lot of calls about what was going to happen. The truth is that Protective Life picked up their entire block of business and kept it intact, didn't change any of the terms (they couldn't by law) and those policies are fully in force today.
Maybe that wasn't a fair example because Empire General was part of the Protective Life Group to start with. But the same held true for Federal Kemper when they were purchased by Zurich, Zurich when they were purchased by Chase, MONY and US Financial when they were purchased by AXA Equitable and Travelers when they were purchased by Met Life.
With insurance companies the block of business has value because of the cash flow from premiums. I guess there should be some distinction drawn here between term insurance and non guaranteed cash value policies. With term insurance there aren't any moving parts. Premium and death benefit. If another company is looking at buying a block of business, a lack of moving parts, bells and whistles is a good thing.
With cash value policies, and specifically cash value policies that are not fully guaranteed, I think some concern about what happens if the company goes under is warranted. While it is as close to an absolute that the block of business will be purchased if it is all fully guaranteed policies, I honestly can't think of a reason that a company would buy a block of non guaranteed business unless the downside on that part of the business was dwarfed by the upside on the guaranteed portion.
Bottom line. If you have a guaranteed level term policy I wouldn't worry about your company. The only thing that will change if they go out of business is who you make the premium check to. By law everything else, the premium, term length and death benefit, has to remain the same.
If you have a variable universal life, or a universal life or whole life policy that is dependent on assumptions and not guarantees, I would switch to something fully guaranteed before you have to find out if it will survive your company's demise.
About The AuthorEd Hinerman has focused his attention and made it his priority to help people with health issues get life insurance they can afford. Visit http://www.hinermangroup.com for more information.
Ed blogs about his insights and tips on life insurance here http://www.hinermangroup.com/blog

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Article Source: http://EzineArticles.com/?expert=Ed_Hinerman

Update August 19 - 2010 All About "Business Life Insurance" Information By Insurance Experts

It is important that people own a business understand what is business insurance, so they can protect their business in case of any unforeseen event happened causing hardship to the business owner and their family such as business store burned down one day, if you don't carry insurance, you would endured some hard times after that. You make sure you have insurance for anything importance, or anything that could prevent you from earning a living.

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How Key Man-Key Person Life Insurance Can Help Save Your Business
By David Goldenzweig

What is Key Man Life Insurance (also known as Key Person Life Insurance)?

Most companies employ at least one person who represents the key to the success of the business (often the owner of the company). The loss or death of that person could deal a real blow to the company and its ability to generate revenues to survive - someone else must be hired to carry on the same tasks performed earlier, and that expense, in addition to the loss of revenue, must be reconciled. Many owners therefore insist on buying life insurance to minimize the risk, and many lenders require that the business carry key person life insurance to protect their loans and investments into the company.

How does it work?

The key person must agree to the purchase of insurance on his/her life. The business typically owns the policy, pays the premiums and remains the beneficiary. The policy can be transferred to the employee if he/she leaves the company, or can be retained if the company is sold - the new purchasers may want to keep the insurance in recognition of the outstanding loans that may be secured to buy the interests of the insured.

Are there other reasons to have Key Man Life Insurance?

Key person policies are often used as well to support a buy-sell agreement between business partners. The proceeds can be structured to purchase the deceased person's shares or interests in the company. The agreement mandates that the deceased executive's estate sell its stock to the remaining partners/shareholders, and that the partners/shareholders purchase the interest for a specified price. The price should help establish the value of the business for estate planning purposes and calculating the estate tax upon death.

David M. Goldenzweig Goldenzweig Financial Group Haymarket, Virginia 20169 Toll-Free 1-877-656-1436 E-mail david@terminsurancebrokers.com Website - http://www.terminsurancebrokers.com Corporate and Personal Life and Health Insurance Life - Disability - Long Term Care - Employee Benefits Recommended Reading Insiders Tips For Reducing Spending Money Saving Tips And Ideas Covers Practically All Areas Of Household And Modern Living Expenditure Back To Insurance Contents Back To General Contents ( Home ) Back To The Top Article Source: http://EzineArticles.com/?expert=David_Goldenzweig

Update August 02 - 2010 All About "Business Life Insurance" Information By Insurance Experts

It is important that people own a business understand what is business insurance, so they can protect their business in case of any unforeseen event happened causing hardship to the business owner and their family such as business store burned down one day, if you don't carry insurance, you would endured some hard times after that. You make sure you have insurance for anything importance, or anything that could prevent you from earning a living.

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The Role of Life Insurance in Family Business Succession
By Barry Milton

You've worked long and hard to build a business. You are now at a point where retirement isn't that far off and the idea of leaving the business to your kids is attractive. Even better, they are interested in taking it over. Now all you have to do is figure out how to deal with the succession process. Life insurance will pay a big role.

Mention the name IRS and nearly everyone will start grumbling. Unless you've gone through a "super audit", you haven't experienced anything even close to dealing with the agency on a business transfer after an owner has passed on.

The agency isn't really at fault. The tax code written by Congress is the problem. It calls for estate and gift taxes to be paid on the passing of an individual for any transfers made to heirs excluding the spouse. Put in English, this means there are going to be tax ramifications for transferring the business to your kids. Big taxes.

Even better, the payment of taxes is due nine months after the passing of the person in question. That might not sound too bad, but think it through. A business is an illiquid asset. How do you come up with a huge chunk of change for something that might make a lot of money, but is itself rather intangible? You can't. This is the reason the Los Angeles Dodgers were sold by the O'Malleys and the Miami Dolphins were sold by Joe Robbie's heirs. There was no other way to come up with the tax bill.

Most of us don't have businesses that are worth hundreds of millions of dollars. A business worth $5 million or so might not be as glamorous, but it is a lot easier to transfer. One way to come up with the cash to pay taxes is life insurance. The policy is taken out on the life of the owner. When they pass, the insurance company pays out a large sum that can be used to pay the taxes. The life insurance has to be positioned correctly in an overall estate plan, but it can be the key to keeping a business in the greater family instead of selling it in a panic to pay the IRS.

Ultimately, that is what you want right?

Barry Milton writes about succession planning and other financial planning subjects for UFCAmerica.com.

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