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Using Life Insurance to Create Fairness in Farm Succession

You can use life insurance to deal with farm succession. One of the main things that insurance agents see is a farmer who is asset rich but cash poor. This scenario can create problems for farm succession, however, life insurance can step in and help create fairness in farm families and cash for the parties involved.

Here’s a great example to show how life insurance can help with farm succession. A farmer has one son and two daughters. In this particular case, the son wants to farm but the daughters have no interest in farming. How should the farmer plan succession of the farm so that the outcome is fair to everyone? One answer is through life insurance. The son can take over the farm and receive the benefits from the takeover, and the daughters can receive the benefit of the life insurance policy. This makes things very simple, and ensures that everyone is treated fairly in the succession of the farm business.

Watch Derrick Peterson explain this and a lot more in this highly informative video!

This workshop was funded in part by the Agriculture & Food Council of Alberta

For further resources on life insurance and farm insurance please refer to the links below:

Life Insurance: An Estate Planning Tool

Guide to Farm Insurance

 

Life Insurance: Who Should Pay the Premiums in Your Farm Family?

Derrick Peterson talks about who, in your farm family, should be paying the insurance premiums for life insurance.

Sometimes it makes sense that whoever is receiving the benefits of an insurance policy is the one that actually pays for the policy. So, in a scenario where the son is receiving the farm, then he would also be the one to pay the insurance premiums. When the son is very young it will certainly be Mom and Dad’s responsibility. However, once the young farmer hits around 30 years old, then often he would be in a position to start paying the insurance premiums.

This workshop was funded in part by the Agriculture & Food Council of Alberta

 

When is the Right Time for a Farmer to get Life Insurance?

Derrick Peterson talks about when is a good time for farmers to invest in a life insurance policy.

Trying to get life insurance in your 60s is a lot more difficult than getting it in your 30s. This is particularly so because health issues start to come into play as we age. Most farm accidents happen when people are younger, so it’s best to get insurance as soon as you can pay for it.

Once you buy life insurance and continue to pay the premiums, it’s yours for life. So, even if when you’re older and have a health issue, you already have the life insurance and no one can take that away from you. Therefore, in terms of planning, it’s prudent to take advantage of the health scenario you’re in as a young farmer.

This workshop was funded in part by the Agriculture & Food Council of Alberta


When is the right time for a farmer to get life insurance?

 

3 Types of Insurance Policies that can Benefit Your Farm Business

Did you know that there are different types of insurance policies that could benefit your farm business? Similar to there being a variety of different ways you can enjoy the benefit of a home, there are a variety of different ways you can enjoy the benefit of an insurance policy.

Using a house as an example, here’s 3 different types of insurance policies:

1. Rent: You can rent a home and pay money to a landlord. This arrangement works great when you don’t have the money to buy, but remember the landlord can always decide to raise the rent! Similarly, there’s insurance products like this where you rent the policy.

2. Rent to own: In some situations, it’s even possible to put the rent you pay to the landlord towards buying the home you’re renting. Again, there’s insurance poliies that work like this, where in the end, you own the policy.

3. Buy: you can outright buy a home. With an insurance policy, if you buy, it’s yours forever.

To learn more, watch Derrick Peterson explains different types of insurance policies for your farm business.

This workshop was funded in part by the Agriculture & Food Council of Alberta