Understanding Life Insurance
What is Life Insurance?
Life insurance is basically a form of insurance where an insurance
company pays monetary proceeds upon the death of the individual
insured in the policy. The money is paid to a beneficiary that
is designated in the policy. People take out life insurance
for several reasons, but mostly to provide financial security
to family and loved ones upon death. Life insurance can also help
meet financial obligations of business owners who may leave
obligations in the event of their death.
Protecting Your Family
By preparing in advance, you'll have the peace of mind that comes
from knowing you're protecting your family's financial future. And
since Life insurance benefits are generally not taxable at the
federal level**, your loved ones can use the benefits to help take
care of their living expenses in a variety of ways.
* Any needs after the time of death, such as final illness expenses,
burial costs and estate taxes.
* Funds for a readjustment period, to finance a move, or to provide
time for family members to find a job.
* Ongoing financial needs, such as monthly bills and expenses,
daycare costs, college tuition or retirement.
If you're a business owner or have business partners, it's important
to prepare for the unexpected. Farmers offers several Life insurance
products that are designed to help you, as a business owner, to make
it possible for your heirs to help pay estate taxes and help sustain
the business during a change in management, or to help provide funds
in order to execute a buy-sell agreement between partners or
Types of Life Insurance Products
This is the simplest form of Life coverage, term insurance is no
more than a matter of premiums and a death benefit. The name fits
since term insurance's span of coverage lasts only a specified
period of time; if the insured dies while the policy is in force,
the death benefit will be paid to the designated beneficiary.
Permanent form of Life coverage that is provided for the insured's
lifetime. Whole Life policies build cash value that the policy owner
may borrow during the insured's lifetime, at a reasonable rate of
interest. If there is an outstanding loan at the time of the
insured's death, the death benefit is reduced by the loan amount.
Permanent form of Life coverage that offers a great deal of
flexibility to the policy owner. Premium payments may be varied,
death benefits may be changed, partial surrenders are allowed, and
cash value may be accessed either through loans or direct
**This document is for informational purposes only. You should
consult your attorney, accountant, or tax advisor for legal or tax