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Life insurance is a financial product with many uses. Life insurance functions as a contract between a policyholder, who owns the policy, an insured individual, and a life insurance company. The policyholder pays for the cost of the policy. The insurance company pays a death benefit to a third party, called a beneficiary, when the insured individual dies. The policyholder names the beneficiary, but does not need the consent of the beneficiary to give him the proceeds of the policy. Because of the unique features of the insurance contract, it has many uses.

Income Replacement
Income replacement is when you purchase life insurance on yourself or a spouse. The insurance company pays a death benefit to the beneficiary when the insured individual named in the policy dies. If you insure your own life, your spouse is normally named as the beneficiary. If you insure your spouse, you are normally named as the beneficiary. The purpose is to provide enough death benefit so that you will be able to maintain your current lifestyle if your spouse dies or, your spouse will maintain her lifestyle if you die. The death benefit replaces the income of whoever is insured under the policy.

Buy/Sell Agreement
A buy/sell agreement is a business buyout agreement between two business partners. If a business partner dies, his ownership in the company is given to his beneficiaries -- normally, his family. But, life insurance, combined with a buy/sell agreement, gives you the right to purchase his half of the business first and use the death benefit proceeds to pay for the buyout. An assessment of the value of the business must be done and a formal agreement must be drawn up before any life insurance is purchased.

Funeral And Burial Payment
When you die, your family must know how to pay for your funeral costs. A life insurance policy provides the money necessary to pay for these expenses. The policy may be a term life insurance policy, but if you live beyond age 85, it will need to be a permanent policy. This is because life insurers do not issue life insurance policies beyond age 85 and term policies stop providing coverage after this age as well.

 Key Person Insurance
Key person insurance refers to life insurance purchased on the life of an executive by a corporation. The corporation does this because the manager's life is valuable to the company. The company suffers a serious financial loss if the manager dies. So, the corporation takes out a policy that covers the cost of finding, hiring and training a new manager if the insured manager dies.

For more information regarding Life Insurance call 540.657.5633.


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Mailing: 11 Hope Rd., Suite 111-306 Stafford, VA 22554 Location:  25 Clement Drive Stafford, VA 22554

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