Even a well castigated sales pitch can fail to arouse the consumers’ action to acquire a Life Insurance policy. Pushing the policy as must have policy without explaining it will serve the insured interest will not provoke action. Life policy is an essence financial planning tool which caters for estate planning of insured, since family love is the greatest motivator of acquiring life policy; a sober mind is needed to incorporate the life policy as part of estate planning.

The policy which is bought for solely reason to pay the beneficiaries upon the death of the insured has to be planned in such a way that the beneficiaries will receive maximum tax benefits. Wealth insured life policy holders who falls in the category of combined gross assets of over $ 3,500,000 and have to pay estate taxes upon their death can legally avoid estate taxation on policy benefits by assigning the ownership of the policy to a different party. The assignment has to be done before prior 3 years upon the death and directions issued for the policy not pay to their estate, but to pay directly to the beneficiary. While purchasing the life policy the gross worth of the estate including the policy value upon the death has to be considered when planning on beneficiary settlement.

Life insurance can either be temporary or permanent depending on the insured need. An individual who plans to acquire policy for specified duration of time will obtain Term Life Insurance policy coverage to suit or serve the required purpose. Most term policies are acquired for duration of 5, 10, 15, 20, 25, 30 years but an individual can even opt to purchase one year policy. Life Term Policy premiums have favorable rates, but the rates increase as life term years increases. People will choose life term policy to offer short term obligation such as insuring mortgage debts or other debt obligation which diminishes as the balance reduces. This helps to avoid the crippling of the insured estate with debts and eliminates the possibility of family members being left without a home. Another reason why a person may choose a life term policy is to avoid paying higher premiums. A life term policy premium favors young people and can be converted to permanent policy without showing the evidence of insurability. Renew ability and convertibility option can be included in the policy to allow the insured to renew the policy or convert it to permanent policy without showing insurability.

There are different applications of life policy which serves the business community. An important application of the policy is the opening out of insurable interest to allow different party to purchase the policy to cover the insured in order to protect their business interest. An individual interested in a sole proprietor business can purchase the policy sufficient to purchase the business by insuring the business owner through sell and buy agreement. The insurance is owned by the business owner but the beneficiary is the buyer who upon the death receives the benefits and purchases the business. In partnership the application is used to ensure liquidity and continuation of the business upon the death of one partner. The partners applies cross purchase plans insuring each other and benefits are paid to the surviving partners upon the death of one of the partner and proceeds are used to buy partner share by paying the family members. The arrangements allows the family members to continue enjoying financial stability through the business owners share which is paid to them and at the same time the continuation of business is not hampered by cash constrains. Because of possibility economic loss due to the death of key person in corporation, a corporation can acquire a policy to insure the key person. This will indemnify the corporation for business losses caused by the death of the insured key person. The key person policy enhances credit standing and smooth financial operations of the company, the chances of creditors demanding payments of debts upon the death of key person are greatly reduced.

Life policy is of great significant to the individual and to the economy as a whole because it can facilitate smooth continuation of a business.