Question

What type of Life insurance such as term, whole life, variable, etc. would you recommend for each of these clients and why? Be sure to explain how each policy works and why it is right for them.

A conservative married man age 50 who owns 15 gas stations in town that are worth over $12 million dollars. His wife is 30 and his 3 sons are all in their 20s with jobs in his business. He wants to work until he dies. He plans to leave all his cash, other investment assets, one million in life insurance, and the fully paid house to his wife, but wants to leave the business in equal shares to his sons. His business is his legacy he intends to pass down his family line for generations. What type of life insurance is right for this man?

Answer 1

Term insurance is a personal life insurance policy which insures the insurers life for a particular term as specified by the terms of the policy.

Whole life insurance is a life insurance that insures the person's life for the whole life of the insurer (not for any particular term)

Variable insurance is a variant of life insurance with different types of features life cash value, variable premium, investment options etc.

Here the conservative business man is concerned about the assets he will leave for his family after death.He is planning to work till death and there is no term upto which the insurance cover is needed. Thus a whole life insurance is the best option here (unlike  the limited term of term insurance) as the payout amount can be used by the sons for business purposes. The flexible life insurance may not be very essential as the price may increase which is not required here.