Transcript Life Insurance - Mccook Elementary School

Section 3
Life Insurance Principles
The Life Insurance Policy
-contract between insurance company and insured
-major elements of a life insurance policy
-name of the insured
-amount of coverage
-cost of insurance
-name of the beneficiary
Life Insurance Principles
Beneficiary Selection
-beneficiary
-the person named in the policy to receive the insurance
benefits
-you can also insure the life of a person in whom you have
an insurable interest
-to have insurable interest, you must receive some kind
of financial benefit from the person’s continued life
Types of Insurance
Term Life Insurance
-insurance that provides financial protection from losses
resulting from a death during a definite period or term
-least expensive form of life insurance
-only type of life insurance that’s purely life insurance
-all other insurances hav savings or investment features
-term can run from 1 to 20 yrs or more
-protection ends when term ends
Types of Insurance
Term Life Insurance continued…
-you can purchase Renewable Term Insurance
-don’t have to take another physical
-you can purchase Level Term Insurance
-amount of protection and premiums remain the same
-you can purchase Decreasing Term Insurance
-amount of protection gradually goes down but
premium remains the same
-appropriate for adults w/ children
Types of Insurance
Permanent Life Insurance
-has cash value and an investment feature
-insurance companies invest remaining part of premium
that’s not need to pay for coverage
-this money is added to the cash value of the insurance
policy
-cash value refers to amount of money the insurance will
pay if the policyholder decides the insurance is not needed
-longer you keep a policy the higher its cash value
-you can also borrow money up to your cash value
Types of Insurance
Permanent Life Insurance Continued…
-permanent life insurance can be scene as a savings plan
-return on cash value on your money is not large
-this plan has a built-in savings feature encouraging saving
-permanent life comes in the form of
-whole life
-variable life
-universal life
Types of Insurance
Permanent Life Insurance
-Whole Life Insurance
-permanent insurance that expands over a lifetime
-ordinary life insurance remains the same each yr
-limited-payments policies can be designated by the
number of yrs the policyholder agrees to pay
Types of Insurance
Permanent Life Insurance
-Variable Life Insurance
-investment plan that resembles an investment
portfolio
-Lets policy holder choose investments
-both death benefit and cash value rise and fall
depending on success of investment
-might guarantee a minimum death benefit
-strong rate of return on invested account and could
increase cash value and death benefit
Types of Insurance
Permanent Life Insurance
-Universal Life Insurance
-provides both insurance protection and a substantial
savings plan
-Payment is split 3 ways
-pays for insurance protection
-expenses
-goes into interest-earning investments
-investment portion earns a variable rate return
-this could rise or fall depending on economy
Types of Insurance
Group Life Insurance
-an insurance policy that covers a group of people
-is less than buying individual
-most group insurance offers term rather than permanent
-the whole company buys then individuals from the
company can decide if they want to join and pay their
share
Buying Life Insurance
Coverage Amount
-anyone with dependents needs life insurance
-a dependent is a person who must rely on another for
financial support
-questions to help determine the need for life insurance
-how much money is required for your dependents’
financial stability if your income is lost
-how much income will you need when you retire and
what will be the source of your income
-what can you afford to pay for your life insurance
needs
Buying Life Insurance
Life Insurance Application
-to buy individual life insurance you have to complete this
application
-apply through insurance agent
-may have to take a physical exam
-if no serious problems you pay premium and receive
coverage
-if work at a high risk job or have poor health you might
be able to get insurance but will have to pay a much
higher rate
Buying Life Insurance
Premium Payments
-type of policy and age affects cost
-older you are higher the cost
-example
-in purchasing a whole life policy, life insurance is higher
than those for term insurance, but annual premium
stays the same throughout insured life