Fine tune life insurance coverage | TSLN.com

Fine tune life insurance coverage

Elizabeth Williams

INDIANOLA, IA (DTN) – Iowa farmer Craig Hill knows the value of life insurance, even when it’s inconvenient.

“When you’re a beginning farmer with a family, that’s the most important time for life insurance, but it’s also a difficult time for cash,” said Hill, 55, who farms with his wife and son in Milo, IA.

“When I first started farming, a quarter million dollars of life insurance was a lot of money,” he added. Now, that wouldn’t even cover operating debt for most commercial farms, let alone outstanding notes on farm equipment or cash to provide security for heirs.

Hill maximized his coverage by buying term insurance. Whole life and universal policies aren’t as important to young farmers as they are to wage earners, since business owners can earn a higher return investing in themselves in their start-up years, he said. “They save by investing in farmland and improving their balance sheet over time.”

On the other hand, operations planning transitions to the next generation sometimes favor whole-life or universal policies to finance buy-sell agreements, or to compensate off-farm heirs so successors don’t face a cash crunch trying to buy farmland from siblings.

But deciding how much and what type of policy you need is just the beginning of the decision process to tailor your life insurance policy to your needs. Here are a few more considerations:

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INDIANOLA, IA (DTN) – Iowa farmer Craig Hill knows the value of life insurance, even when it’s inconvenient.

“When you’re a beginning farmer with a family, that’s the most important time for life insurance, but it’s also a difficult time for cash,” said Hill, 55, who farms with his wife and son in Milo, IA.

“When I first started farming, a quarter million dollars of life insurance was a lot of money,” he added. Now, that wouldn’t even cover operating debt for most commercial farms, let alone outstanding notes on farm equipment or cash to provide security for heirs.

Hill maximized his coverage by buying term insurance. Whole life and universal policies aren’t as important to young farmers as they are to wage earners, since business owners can earn a higher return investing in themselves in their start-up years, he said. “They save by investing in farmland and improving their balance sheet over time.”

On the other hand, operations planning transitions to the next generation sometimes favor whole-life or universal policies to finance buy-sell agreements, or to compensate off-farm heirs so successors don’t face a cash crunch trying to buy farmland from siblings.

But deciding how much and what type of policy you need is just the beginning of the decision process to tailor your life insurance policy to your needs. Here are a few more considerations:

INDIANOLA, IA (DTN) – Iowa farmer Craig Hill knows the value of life insurance, even when it’s inconvenient.

“When you’re a beginning farmer with a family, that’s the most important time for life insurance, but it’s also a difficult time for cash,” said Hill, 55, who farms with his wife and son in Milo, IA.

“When I first started farming, a quarter million dollars of life insurance was a lot of money,” he added. Now, that wouldn’t even cover operating debt for most commercial farms, let alone outstanding notes on farm equipment or cash to provide security for heirs.

Hill maximized his coverage by buying term insurance. Whole life and universal policies aren’t as important to young farmers as they are to wage earners, since business owners can earn a higher return investing in themselves in their start-up years, he said. “They save by investing in farmland and improving their balance sheet over time.”

On the other hand, operations planning transitions to the next generation sometimes favor whole-life or universal policies to finance buy-sell agreements, or to compensate off-farm heirs so successors don’t face a cash crunch trying to buy farmland from siblings.

But deciding how much and what type of policy you need is just the beginning of the decision process to tailor your life insurance policy to your needs. Here are a few more considerations:

INDIANOLA, IA (DTN) – Iowa farmer Craig Hill knows the value of life insurance, even when it’s inconvenient.

“When you’re a beginning farmer with a family, that’s the most important time for life insurance, but it’s also a difficult time for cash,” said Hill, 55, who farms with his wife and son in Milo, IA.

“When I first started farming, a quarter million dollars of life insurance was a lot of money,” he added. Now, that wouldn’t even cover operating debt for most commercial farms, let alone outstanding notes on farm equipment or cash to provide security for heirs.

Hill maximized his coverage by buying term insurance. Whole life and universal policies aren’t as important to young farmers as they are to wage earners, since business owners can earn a higher return investing in themselves in their start-up years, he said. “They save by investing in farmland and improving their balance sheet over time.”

On the other hand, operations planning transitions to the next generation sometimes favor whole-life or universal policies to finance buy-sell agreements, or to compensate off-farm heirs so successors don’t face a cash crunch trying to buy farmland from siblings.

But deciding how much and what type of policy you need is just the beginning of the decision process to tailor your life insurance policy to your needs. Here are a few more considerations:

INDIANOLA, IA (DTN) – Iowa farmer Craig Hill knows the value of life insurance, even when it’s inconvenient.

“When you’re a beginning farmer with a family, that’s the most important time for life insurance, but it’s also a difficult time for cash,” said Hill, 55, who farms with his wife and son in Milo, IA.

“When I first started farming, a quarter million dollars of life insurance was a lot of money,” he added. Now, that wouldn’t even cover operating debt for most commercial farms, let alone outstanding notes on farm equipment or cash to provide security for heirs.

Hill maximized his coverage by buying term insurance. Whole life and universal policies aren’t as important to young farmers as they are to wage earners, since business owners can earn a higher return investing in themselves in their start-up years, he said. “They save by investing in farmland and improving their balance sheet over time.”

On the other hand, operations planning transitions to the next generation sometimes favor whole-life or universal policies to finance buy-sell agreements, or to compensate off-farm heirs so successors don’t face a cash crunch trying to buy farmland from siblings.

But deciding how much and what type of policy you need is just the beginning of the decision process to tailor your life insurance policy to your needs. Here are a few more considerations:

editor’s note: this is the sixth installment in dtn’s 2011 series on estate and transition planning. for the complete series go to http://www.dtn.com/ag/indepth.

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