When to Consider Buying Life Insurance

February 8, 2013


There are life events which should encourage families to consider buying life insurance. Unfortunately, life insurance is not a priority in the lives of many young families, as younger people tend to believe that they have many years ahead of them. However, the prudent thing to do would be to purchase life insurance to cover a loss of income in the event that something happens to one or both of the parents or if they become disabled.

They can purchase enough life insurance to cover college costs as well for the children. In the case of younger parents, life insurance is very inexpensive in the earlier years and parents would be able to afford to buy higher amounts of insurance coverage.

Newly weds should consider buying life insurance on themselves to protect their incomes in the event that something happens to them. If husband and wife are working, both can purchase life insurance on themselves. In this way, both can continue their normal lifestyles in the event of death or disability of the spouse.

When couples purchase a home, one thing that needs to be done is to purchase mortgage insurance to cover the mortgage in the event of death or disability of one of the partners. Many people suffered a loss of their properties during the economic crisis because they were not adequately insured. Some people may not be able to purchase enough to cover the entire mortgage, but any amount which they can afford would help their family.

When families experience financial hardship, the insurance is usually the first thing to go. Now, with the changes that insurance companies have enacted, families can continue their life insurance coverage in the event that the policyholder is disabled, unemployed, or when the family suffers a natural disaster.

In conclusion, families need to consider purchasing or increasing life insurance when they marry, purchase a home, or begin to have children, if they care about making sure they are protected in the event of death or disability. If you would like a review of your situation, feel free to contact me.


What is Buy-Sell Agreement?

February 2, 2013


Business partners need a buy-sell agreement or buyout agreement when they form a business or immediately after. It is an agreement which protects the interest of each party whenever there is an event which would change ownership. The agreement would set the price and the conditions upon which the mandatory or optional buyout would take place. Whenever this process is delayed, the business owners increase their financial risk.

The goals of the buy sell agreement would be:

· the identification of the events which would trigger the purchase of the business and to ensure that the business owners’ interest would be protected,

· to identify the buyer of the owner’s interest in the business, i.e., the company, the remaining owner, or joint ownership of the owner and the business,

· to provide a procedure for determining purchase price of the business, according to market conditions when the event occurs,

· to provide a way of funding the agreement, such as through life insurance

· to determine the deceased owner’ interest in the business for estate tax purposes

There are several events which would trigger the optional buyout of an owner’s interest in the business. They include death or disability of an owner, the decision to transfer ownership to a third party, the retirement of an owner, divorce of an owner, or bankruptcy of the business. In the event of death or disability, the business owner’s family would be protected, since the business owner supported the family with his share of the proceeds of the business. If the decision to create a buy sell agreement is delayed, it places the family at risk for financial hardship. Conversely, divorce or bankruptcy would make the business vulnerable to outsiders, such as a spouse or a creditor. Creating a buy-sell agreement would prevent these outsiders from taking over the business.