How much life insurance should I have?
There are many and varied needs for funds upon the death of an individual, and all must be taken into account to arrive at a proper amount of insurance. Your agent at Denis, Ricker & Brown can talk with you about your needs and goals, and illustrate how each item translates into a given amount of funds needed at the time of death. Factors that we will review with you include:

1. Income sources (and amounts) other than salary/earnings
2. Whether or not the individual is married and, if so, what is the spouse's earning capacity
3. The number of individuals who are financially dependent on the insured
4. The amount of death benefits payable from Social Security and from an employer sponsored life insurance plan
5. Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need), etc.

Are there different types of life insurance I should consider?
Although there are many types of life insurance policies, nearly all are variations of two basic types-term and permanent. (A third type, known as "universal" life, is a combination of term, permanent and various investment options. Its complexity is beyond the scope of our overview, but if you are interested, your agent at Denis, Ricker & Brown can discuss if universal is a good fit for your life insurance needs and goals.)

Term insurance is exclusively death coverage. The policies are written for a specific length of time (the "term" referred to in the name). Common terms are one year, five year and ten year, although longer terms may be available. If the insured dies during the term of the policy, the death benefit is paid to the beneficiaries. If at the end of the term the insured is still alive, the coverage ends.

Unlike term insurance, a "permanent" insurance policy (often referred to as "whole life") never terminates as long as the premiums are paid. It also builds cash values in the policy that can provide valuable "living" benefits in addition to the death benefit.

Now that my business is established, I think it is time to offer my employees some benefits. What do I need to know?
Employee benefits generally include health insurance (sometimes including dental and vision benefits), term life insurance, and possibly a retirement program. Group disability insurance is also available, although employers and employees opt for this benefit less frequently.

Employers can provide coverage for their employees alone or for the employees and their families. Cost is usually the determining factor. With the high cost of health insurance in the United States today, employers are more likely to ask employees to pay some or all of the costs of health insurance for their families and sometimes for the employees themselves.

Depending on the size of the group to be insured, the business may serve as the policyholder for the group's insurance. However, for many small businesses, the insurer will pool them together in a multiple-employer trust. The trust itself, rather than any single employer, is the policyholder. This enables smaller businesses to benefit from the lower premiums and other services enjoyed by large groups.

What are the advantages and disadvantages of term insurance?

Advantages:

• Initially, premiums are generally lower than those for permanent insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection is often greatest.
• It's good for covering specific needs that will disappear in time, such as mortgages and car loans.

Disadvantages:

• Generally, premiums increase as you grow older.
• Coverage may terminate at the end of the term or may become too expensive to continue.
• Generally, the policy doesn't offer cash value or paid-up insurance.

What are the advantages and disadvantages of permanent insurance?

Advantages:

• As long as the necessary premiums are paid, protection is guaranteed for you entire life.
• Premium costs can be fixed or flexible to meet personal financial goals.
• Policy accumulates a cash value that you can borrow against. Loans must be paid back with interest or your beneficiaries will receive a reduced death benefit.
• The policy's cash value can be surrendered - in total or in part - for cash or converted into an annuity (an annuity is an insurance product that provides an income for a person's lifetime or for a specific period of time). There may be possible tax ramifications if you surrender a policy.
• A provision or rider can be added to a policy to give you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurablility.

Disadvantages:

• Required premium levels may make it hard to buy enough protection.
• It may be more costly than term insurance if you don't keep it long enough.

What is an annuity?
An annuity is a fixed or variable investment contract, issued by an insurance company, that provides income payments to an annuitant or beneficiary, beginning immediately upon issuance of the annuity (immediate annuity) or at a future date (deferred annuity).

The income can be paid until the death of the annuitant, for a specified number of years, or as a fixed amount until the funds are depleted.

There are generally two stages in the life of an annuity. The accumulation phase, during which contract values build, and the payment phase, when the contract values are distributed.

What is the difference between an IRA and a personal annuity?
Each year as you do your taxes you are probably reminded that contributions to an IRA may be deducted from current taxable income if you meet certain eligibility requirements.

A personal annuity, on the other hand, is one that an individual purchases with after-tax dollars.*

*An annuity which is not used to fund a qualified plan.