For many farm and ranch families, bringing children or grandchildren into the operation is the ultimate goal. Successfully bringing additional family members into the operation may require some creativity as all parties need to maintain a viable standard of living. This article is part of a series that will highlight ideas and tactics for bringing another family member into the operation.

Life insurance can be a key tool for farm and ranch businesses to provide tax-free death benefits at the death of the insured if the policy is structured correctly. This article will discuss how life insurance should be structured, and the different types of life insurance.

Policy Structure

Life insurance policies have three parties: (1) the owner, (2) the insured, and (3) the beneficiary. The owner of the policy is responsible for paying the premium and has the authority to change the beneficiaries, adjust the coverage amount, or surrender the policy. The insured is the person whose life is covered by the policy.  If the owner and insured are different parties, the owner must have an insurable interest in the life of the insured at the start of the policy. The beneficiary is the person who receives the death benefit (money) at the death of the insured. Continue reading

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