Uses of Life Insurance

Life Insurance

A financial product providing a death benefit to beneficiaries upon the death of the insured.

Living Benefits

The advantages of life insurance that can be utilized while the insured is still alive, such as cash value accumulation.

Cash Value

A feature of permanent life insurance that accumulates over time and can be borrowed against by the insured.

Human Life Value Approach

A calculation to determine necessary life insurance based on the expected lifetime earnings of an individual.

Needs Approach

A method of life insurance planning that assesses the financial needs of the insured and dependents.

Emergency Fund

A reserve fund created to cover unexpected expenses, included in a life insurance needs analysis.

Buy-Sell Agreement

A legal contract used in business continuity planning to outline ownership transfer upon an owner's death or disability.

Cross-Purchase Plan

A buy-sell plan where each partner purchases life insurance on the other partners to facilitate ownership transfer.

Entity Plan

A buy-sell agreement where the business itself buys life insurance on partners and is responsible for payment of premiums.

Key Person Insurance

Insurance aimed at mitigating financial loss for a business due to the premature death of essential personnel.

Deferred Compensation

An executive benefit that allows an employer to pay an employee at a later date, usually after retirement or disability.

Salary Continuation Plan

An agreement where an employee continues to receive income payments from an employer upon retirement, disability, or death.

Split-Dollar Plan

A shared arrangement between employer and employee to purchase a life insurance policy that benefits both parties.