The BC Journal

young family

Life Insurance – A Primer

Why Own Life Insurance?

Life insurance can help a family cope with financial hardships that result from the death of a breadwinner: pay off a mortgage, secure a college education, provide income for a surviving spouse and children, etc. Certain types provide living benefits as well: tax free dividends, tax free withdrawals, cash when you need it (be your own banker!) and supplemental retirement income on a tax advantaged basis. 

For businesses, life insurance can secure loans, recover the economic loss created by the death of a key employee, secure the benefits provided by executive benefit plans, fund shareholder buyout agreements (including family buyouts), etc.  


What Type of Life Insurance is Right for Me?

Life insurance comes in many flavors: Whole Life, Term, Universal Life, Variable Universal Life, and Indexed Universal Life. 

Which one is right for you? I’m sure you’ve guessed the answer: “It depends.” On what? Your objectives, tolerance for risk, health and age, and family or business circumstances, to name a few.


#Finterms: Net Death Benefit

The total death benefit payable on a policy, upon the Insured's death, which includes basic policy, dividends and riders.

The amount has been adjusted for any outstanding premiums, loans, etc.

Interest from the date of death to the date of disbursement will be added to the death benefit proceeds. 

#finterms #NetDeathBenefit #insurance

#Finterms: Total Enterprise Value (TEV)

Total Enterprise Value, or TEV, is valuation metric that quantifies the total value of a company.  TEV is often used when evaluating the overall economic worth of a business in the context of a sale or acquisition.

Whereas many public companies are measured on a market capitalization basis (total shares outstanding multiplied by the current stock price) that indicates just the equity value of an entity, TEV incorporates the value of both equity and debt, making it a more comprehensive measurement and comparative tool to evaluate companies with varying capital structures.

TEV is calculated by taking the equity value of a company and adding debt and preferred stock while subtracting cash.

Lastly, TEV is commonly paired with revenue and EBITDA data points to form the market multiplies ‘TEV/Revenue’ and ‘TEV/EBITDA.’ These multiples assist with relative valuation comparisons between companies.

#finterms #TEV #valuation #metric #economicworth #acquisition #EBITDA

#Finterms: Wash Sale Rule

An Internal Revenue Service (IRS) regulation that prohibits taxpayers from taking a tax deduction for the loss on the sale of a security that they replace with the same security within 30 days.

#washsale #IRS #security #regulation