What type of insurance can be classified as involving policies with large face amounts, often initiated for business purposes?

The correct classification for policies with large face amounts often initiated for business purposes is life settlements. Life settlements involve the sale of a life insurance policy to a third party for a lump sum payment, and they typically occur when the policyholder no longer needs the coverage or can no longer afford the premiums.

These transactions can involve significant sums, especially when the policy is on an individual with a higher life expectancy. Businesses might engage in purchasing these policies as investments, anticipating the eventual payout upon the death of the insured.

In contrast, term insurance primarily provides coverage for a specified period and generally has lower face amounts suited for personal or family protection rather than large business transactions. Whole life insurance, while it may have higher face values, is more about providing lifelong coverage with a cash value component, rather than being a tool for business-oriented financial strategies. Pension plans, although crucial for retirement savings, do not fit this context as they are not insurance policies and serve a different purpose in financial planning.