Many people ask me to explain life insurance in the most basic terms. The Life Foundation has a very good description of life insurance on their site. Here it is:

There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.

Term insurance is designed to meet temporary needs. It provides protection for a specific period of time (the “term”) and generally pays a benefit only if you die during the term. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.

In contrast, permanent insurance provides lifelong protection. As long as you pay the premiums, and no loans, withdrawals or surrenders are taken, the full face amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.

It’s impossible to say which type of life insurance is better because the kind of coverage that’s right for you depends on your unique circumstances and financial goals.

Explore the other parts of this section to learn more about term and permanent insurance and the pros and cons of each. Also, try our interactive decision tree. It walks you through the questions you need to consider to determine the kind of life insurance that’s right for you.

But remember, the best way to figure out the amount and type of life insurance that makes sense for your particular situation is to meet with a qualified life insurance professional.

If your employees drive a company vehicle, if you have delivery trucks of any kind, and even if you use your car for work purposes or ask employees to drive their cars to do work for you, then you need auto insurance for your business.

It’s a whole lot easier to save money on your business’ car insurance than it is for just about any other kind of insurance that you will buy for your business. The goal is to choose the highest deductible that you can afford – and make sure that you can afford it – and you premiums will fall accordingly. Another way to save is to knock off the collision and comprehensive coverage for the older vehicles you use for your company – the insurance and/or cost to repair damages is most likely more than the car is worth.

One place you don’t want to skimp, however, is on the liability limits you choose for your policy. Follow the standards provided by your state and you could end up with far too little coverage. Costs for damages and liability will then come out of the company coffers or even a lien on future earnings. Go for at least $1 million in liability coverage and you should be fine.

Let’s start with some simple definitions first and then you may be able to understand why blood pressure is so important to the life insurance underwriter.

• Systolic – the maximum pressure exerted when the heart contracts
• Diastolic – the pressure in the arteries when the heart is at rest
• Pulse Pressure – the difference between the systolic and diastolic readings

Diastolic blood pressure (DBP) is the driver of mortality risk under age 45. However, as we age, systolic blood pressure goes up while diastolic readings slowly decline, widening the pulse pressure. When the pulse pressure gets too wide it reflects arterial stiffening. Underwriters don’t like this for obvious reasons as it bodes unfavorably for both mortality and morbidity.

As you can see, this is one of the reasons why blood pressure is so important in life insurance underwriting.

When it comes to property and casualty coverage for your business, you have two basic choices: all-risks coverage and named peril coverage. Named peril coverage is like your homeowner’s insurance policy in that damages and liability caused by certain named disasters will be covered and all other damages and liabilities won’t be. All-risks coverage will take care of the damages and liabilities caused by anything.

Of course, you want all-risks coverage. But remember no insurance policy comes without exclusions. Some exclusions will be written in based on the nature of your business or the geographic location in which you do business. If your area is prone to ice storms or explosions are common due to the chemicals you work with, these will most likely be exclusions to your all-coverage policy. You still need coverage for these things, however, and will need to purchase add-on coverage that specifically covers these events.

The next thing you want to make sure you have in terms of property and casualty insurance for your business is replacement cost insurance. This will pay the full bill to replace your covered property, even if the current price of the equipment far exceeds that of your own purchasing price years ago. This means that inflation won’t hurt you in the claims department, as long as the full cost of replacement isn’t higher than the policy coverage limits.

Do the math and read the fine print to make sure that your business is fully covered.

It’s a good idea to review your life insurance policy every two to three years. Life changes and so will your life insurance needs. An obvious example is if you have a new baby. But your life insurance needs will also change if you buy a new home or even get a raise. Life insurance is so inexpensive today there is no reason why you shouldn’t have at least 10 times your income. However, to get a more precise idea of how much you need, check out a life insurance needs calculator. You can use ours or find another on the web. Make it a habit to review your life insurance policy as you would review or re-balance your portfolio.

If you have employees, even one employee, you are required by law to also have worker’s compensation insurance. This coverage takes care of medical costs and lost wages that are incurred by employees who are hurt on the job. It also covers your liability in the event that family members of an employee who is disabled or killed on the job decides to sue you or your company.

There is another aspect of worker’s compensation insurance coverage but it is optional. This third aspect covers employment practices liability or the cost of legal bills incurred when you or your company or your employees are sued for sexual harassment or discrimination.

In this area, it is essential that you remain up to date on the state and local laws regarding worker’s compensation coverage. It is a rare insurance agent who will keep up with this for you and contact you when your policy needs updating. This doesn’t happen. It is your responsibility to make sure that you are in compliance with local business law. The department of insurance or insurance commissioner’s office in your state will have all the answers you need.

Another way to cut costs is to ensure that all jobs in your company are properly classified. Insurance agencies give jobs different classification ratings depending on the degree of risk of injury.

If someone dies and you are the beneficiary of his or her life insurance policy, you can usually accept the proceeds in one of three ways:

1. As a lump sum – receiving all the money at once
2. In fixed payments over a specified period of time
3. By establishing an annuity that makes regular payments to you for the rest of your life.

If you don’t need all the money right away or don’t want to worry about investing it, you may instead be able to take the benefits in fixed payments for a specified number of years, such as 10 or 20, or you may want to annuitize the payments to guarantee monthly or annual payments for the rest of your life. Those alternatives make sense if you want the security of a steady income.

There are a number of organizations out there whose sole focus is to help make sure that you get the business insurance coverage that you need. If you’re confused about what kind of insurance coverage you need for your business or concerned that you may not be fully covered, these organizations can help.

Home Business Institute (HBI). P.O. Box 301, White Plains, NY 10605-0301. (888) DIAL-HBI. These guys specialize in insurance for home businesses.

American Entrepreneurs Association (AEA). 2392 Morse Ave., Irvine, CA 92614. (800) 482-0973. Here you can find everything for small business coverage from term life to HMO and PPO plans to dental insurance.

More after the jump…

Liability coverage for your business is essential. The wrong claim at the wrong time or if you are underinsured can wipe out your business and, unless you’re incorporated, your personal assets as well.

Start with a comprehensive general liability coverage and go from there. A good policy will cover you against any claims for injuries or accidents that occur on the premises of your business or as a result of exposure to or use of your products.

Be forewarned. Though these issues are generally covered by a standard comprehensive liability policy, there are exceptions. Many exceptions. For example, the injury or accident cannot be due to poor workmanship on yours or your company’s part. Do a careful inventory of what exactly is covered by your basic policy and then consider what extra add-on coverage you will need in order to address concerns specific to your company or industry.

More after the jump…