Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Life Insurance Policy

A life insurance policy can be taken out to insure an individual, as well as his or her spouse and children. Employers can take out a life insurance policy on key employees, but are not able to do so without the proposed insured’s knowledge and consent (called “key man life insurance”).

A life insurance policy can also be purchased to protect against the death of a business partner. The key is that you must have an insurable interest in the person; that means they mean more to you alive than the dead.

A person who has a mortgage, car loan and accumulated debts needs to have life insurance coverage in place to cover these expenses if they pass away. Life insurance can also be used to pay for child care expenses and/or housekeeping services if needed. Another use for these funds is to establish or add to a college savings fund.

The proceeds from a life insurance policy can also be used to pay for funeral expenses. Without this protection in place, the family will be responsible for paying this expense themselves. Buying a life insurance policy means that an already-difficult time will a little less strained.

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Life Insurance Policy for Spouse or Children

It’s relatively common for spouses or life partners to have life insurance in place. The idea behind buying life insurance is to replace income if the insured dies. Some people get insurance coverage as part of their work-related benefits package, but the death benefit is usually limited.

Most people are underinsured, as opposed to having too much insurance coverage in place. Having a death benefit equal to five or 10 years’ salary is not unreasonable to provide the right level of financial protection. When someone is looking to buy insurance, they will likely need the highest level of protection during their prime earning years, which is also when they are paying for a mortgage and trying to raise a family.

One spouse can buy a policy for the other, but the person being insured will need to provide the insurance company with some health information before the policy can be issued. In some cases, the insurance company will need the applicant to undergo a medical examination, or provide a blood or urine sample as part of the application process.

Parents may wish to buy a life insurance policy for their children. In this situation, the goal is not to replace income, since the child doesn’t have any, but rather to cover the cost of funeral expenses if the child dies. The child’s life insurance coverage may be added as a rider to one the parents’ policies.

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Policy for Employees

A company that relies on certain employees for key functions may wish to buy life insurance to protect itself against the loss of one or more of its key players. If a person holding one of these key functions within the company dies, the corporation will not be able to continue as usual. It may need to recruit someone to replace the deceased or hire outside technical help to keep the business running until a permanent replacement can be found.

The company will need to inform the employee that it intends to take out a policy with itself as the beneficiary. The employee will need to provide at least some basic health information as part of the process. The larger the death benefit being applied for, the more medical information the insurance company will need before deciding whether it can extend coverage to the employee.

Policy for a Business Partner

A person who is running a business with one or more partners will want to consider having life insurance coverage in place as well. The proceeds of the policy can be used to recruit someone to take over the business partner’s function in the company or to give the survivors time to find another solution to trying to run the business after tragedy strikes.

Life insurance policies are usually bought to replace income. Adults who don’t want to leave their loved ones to pay for debts and funeral expenses after their demise should have some coverage in place. The funds can be used to help support minor children or aging parents. Parents can buy a policy to cover their minor children to help pay for funeral expenses.

Buying coverage for employees or business partners is something is not uncommon in the business world. Companies need to make sure that any interruptions to doing business are kept to a minimum when key employees or business partners pass away. An insurance policy can provide protection when a tragedy like that takes place.

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