Using Key Person Life Insurance to Secure Your Business

December 21, 2020 12:23 newlambertagency

You must be aware that a life insurance policy can provide the necessary financial protection to your dependents in the event of your death.

But do you know that a term life insurance policy can also help to keep the company running smoothly in the event of the death of a key member of your leadership team?

Such a life insurance policy is called key person life insurance or key person insurance and it can provide an income tax–free death benefit when they’re needed most during transitions in your company.

Key Person Insurance is a life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary of the plan and pays the insurance policy premiums. This type of life insurance is also known as “key man insurance,” “key woman insurance” or “business life insurance.”

Who is a key person in your business?

If you’re a business owner, it’s natural that you care about all your employees and would want the best for them. But there are certain employees whose absence can affect your business operations directly.

This person might be handling the operations, managing your profits, or is a business partner. So for your company, this individual becomes the key person.

How key-person insurance works with a term life insurance policy

A key-person life insurance is a term life insurance policy that provides cash to meet outstanding debts and maintain business continuity.

As a company, you need to obtain the key employee’s written consent and follow the formalities necessary to approve the purchase of the key person life insurance policy.

In any case, the company or the business pays all the premiums and is the beneficiary of insurance on the key employee’s life.

Thus if the key employee dies, the company receives the policy benefits to cover losses and find and train a replacement.

After the business files a claim following the death of the key person, the life insurance carrier will pay the policy benefit income tax-free to the business.

Then the business can use the benefit to replace lost earnings, provide a financial cushion, recruit and hire a qualified replacement, make survivor income payments to the key person’s family, etc.

Death is unpredictable and you can’t be overly dependent on your current cash flow to sustain your business in the event of a key person’s death.

Buying key person life insurance means you’ll have the necessary financial assets available at crucial times. Thus consult an agent, do thorough online research, and apply for such a policy to put your mind at ease.

A Guide to Life Insurance for Non-US Citizens

December 9, 2020 02:29 newlambertagency

Life insurance is an integral part of life. There are various plans available that meet the unique requirement of individual US citizens.

But what about life insurance for the non-US citizen? Not everyone who lives in the states is a US citizen, so what options do they have as far as life insurance is concerned?

Non-US citizens generally fall into these categories:

Permanent residents: Also called green card holders, they are treated as same as US citizens.

U.S. Residents: Even though they’re not US citizens, they live in the US. This includes visa holders and work permit holders.

Non-US Residents: Even if you’re a US citizen that primarily lives outside the US, you would come under this category.

Can non-U.S. citizens buy life insurance?

You can get life insurance even if you’re a non-U.S. citizen as long as you have the proper documentation. But as with everything, you might experience some roadblock. Your citizenship status also affects the approval of your life insurance policy from the insurance company.

There are a number of factors that determine the cost of life insurance, but your best chance of getting affordable life insurance is to apply through a broker.

Life insurance and Non-Citizen IDs

Life insurance for non-US citizens also depends on the type of ID/documentation that verifies your legal status in America.

Below are the most common types of non-US citizen ID:

Green card: Green card holders will encounter very few roadblocks and may qualify for best-class rates.

Visa: Visa holders will often see additional steps and some carriers will not be able to offer coverage.

Student Visas: Because most student visas are temporary, many carriers are hesitant to offer coverage.

How carriers approve non-citizens

Most life insurance carriers judge whether or not they can offer life insurance for non-US citizens based on the below criteria.

ID type

Most carriers separate the people they are able to give life insurance based on the type of visa an applicant has. For example, some companies can offer life insurance to students from abroad who are studying in America with an F-class Visa, but most cannot.

Substantial Presence

For most companies, showing 1 year of residential proof is enough to grant life insurance for the non-US citizen. But some carriers require up to 5 years of residence. If you’ve not been in the US for 1 or more than a year, they will consider you to be a Non-Resident. However, a non-resident can still be approved by a few carriers, and may even get best-class offers.

Approved countries list
Many insurance companies have limits on whom they can insure based not only on your visa status but on your home country as well. Some countries don’t allow their citizens to buy life insurance outside of their home country. However, this list is short so it’s typically not an issue.

Life insurance is extremely important to protect your family’s future, especially if they’re dependent on your sole income. So don’t let your citizenship be a problem in attaining your life insurance.

Life Insurance Buyer’s Guide

December 3, 2020 17:48 newlambertagency

Life insurance is an essential part of life that isn’t discussed enough. Of course, no one wants to talk about the different plans and coverage in their day-to-day conversations; but it’s important to have a general idea about it so you can safeguard your family from any financial trouble that may arise in the future.

With the help of this life insurance buyer’s guide, you can put your mind at ease and make an informed decision.

Buying life insurance

When you decide to buy a life insurance policy, you would want a plan that fits your budget and provides the necessary financial support to you or your loved ones. So your first step should be to decide how much you need and how much you can afford. Then you can move on to find the type of policy you want and like. We will discuss that too in this life insurance buyer’s guide.

A good way to decide how much life insurance you need is to figure how much income your dependents would need in the event of your death. Life insurance can be a source of cash for handling taxes, mortgages, and illnesses. Hence, your policy must provide the necessary financial support if your income is no longer available.

Choosing the right type

Every life insurance policy pays off a specific amount of money when the insured dies. But not all policies are the same. Below are the 3 basic types of life insurance that we’ll discuss in this life insurance buyer’s guide:

  • Term life insurance
  • Whole life insurance
  • Endowment insurance

Just remember that no matter how fancy the policy title may seem, all policies contain one or more of the 3 basic types.

Term insurance

Term life insurance provides coverage for a specific period of time. This is the “term” of the policy. If the policy owner dies within the set term of coverage, their beneficiaries will receive a check from the life insurance company. Once the term is over the coverage terminates unless you convert or renew the policy.

A term life insurance policy can last anywhere from one year to 40 years with coverage amounts ranging from $50,000 to millions of dollars. Some term insurance policies are extendable for 1 or more additional terms if your health has changed. However, each time you extend the policy, the premium gets higher.

 Whole life insurance

Whole life insurance is designed to last your entire life, often has fixed premiums, and accumulates a cash value over time. In general, whole life insurance is the most comprehensive and fully featured type of permanent coverage. This means that it typically has the highest premiums as well.

Although premiums are higher than term life, whole life policies develop “cash value” which you may avail if you like. You can either take the cash amount or use it to buy some continuing insurance protection.

Endowment insurance

This type of insurance pays a sum amount to you if the policyholder lives to a certain age. And if you were to die before then, the death benefit would be paid to your beneficiary. Premiums are higher for endowment insurance thus are not a very popular type of insurance amongst Americans.

Thus to summarise this life insurance buyer’s guide – you need to know how much you can afford, what are the benefits and which type of insurance fits your requirement the most. Never buy life insurance without proper research – check the plans and compare, consult with an insurance agent and your family members, and only then make a decision.