Asset Definition
The Dictionary of Insurance Terms and Definitions
An asset is anything that contributes to the aggregate value of its owner. Usually this means cash, investments, and other property. For life insurance shoppers, both the assets of the insurer and the buyer are of importance.
A life insurance companies assets may include cash, stocks, real estate, and so forth. The insurer must hold sufficient assets to remain in business and not fail to pay the death claims that are filed on its policies. The holdings of the company are a major factor in determining its financial ratings, which are grades calculated by credit information agencies, for use by consumers. At wholesaleinsurance.net, we post each insurer's A.M. Best financial strength ratings with every quote we show.
The buyer's assets are important because they can offset the financial impact of a death. In other words, if an insured dies but he/she leaves a bank account full of cash to his/her heirs, then the heirs have less of a need for life insurance.
When you calculate the amount of coverage you need to buy, don't stop just after figuring out what your survivors' financial needs are. That may lead you to purchase more life insurance coverage than you really need. Evaluate your assets and subtract their value from your survivors' financial needs. Do you have an extra house that your survivors could sell? A business? Stocks? Savings?
