Life

The need for insurance can fit in different time frames:

1. Short-term needs: Some examples of short-term needs include a lender requiring that insurance be placed on the life of a borrower until the loan is repaid and providing coverage for a spouse with young children until the children grow older. Generally insurance that is needed for 15 years or less can be considered short term.
2. Long-term needs: Most other needs would generally be of a long-term nature. Generally, insurance that is needed for more than 10 or 15 years can be considered long term.
3. Permanent needs: A permanent need for insurance occurs where the need exists throughout the individual's lifetime and is not expected to be eliminated. For example, providing liquidity in the estate to cover the taxes and settlement costs would be a permanent need if the estate was comprised of mostly illiquid assets and the individual had no intention of selling the business.

Life insurance is a contract between the policy owner and an insurance company under which the company agrees to pay a specified sum to the designated beneficiary upon the death of the insured, in return for premium payments. The basic types of life insurance products are term and permanent insurance. All life insurance contains a pure death benefit element. Permanent policies add a cash value component, whereas temporary (or term) insurance does not.