Term Life Insurance

1. SECTION 11-3 pp. 378-380 Term Life Insurance

2. Utilize tables to compute: • annual premium for term life insurance Section Objective

3. Key Words to Know life insurance (p. 378) Financial protection for a family in case a family member dies. term life insurance (p. 378) Life insurance for a specified term, such as five years, or to a specified age, that ends unless the policy is renewed.

4. Key Words to Know beneficiary (p. 378) A person who receives the money from life insurance if the insured dies.

5. Formula Annual = Number of Units × Premium Premium Purchasedper $1,000

6. Insuring Your Life p. 378 What is the difference between term and life insurance?

7. Example 1 Ken Calloway is 30 years old. He wants to purchase a $50,000, 5-year term life insurance policy. What is his annual premium?

8. Example 1 Answer: Step 1 Find the number of units purchased. $50,000 ÷ $1,000 = 50 units purchased

9. Example 1 Answer: Step 2 Refer to Figure 11.2 below. Find the premium per $1,000.

10. Figure 11.2 Male, age 30 = $2.47

11. Example 1 Answer: Step 3 Find the annual premium. Number of Units Purchased × Premium per $1,000 50 × $2.47 = $123.50

12. Practice 1 Refer to Figure 11.2 above to find the annual premium for a 5-year term life policy. Male, age 45. 5-year term life. $150,000 coverage. What is the annual premium at age 45? What will be the annual premium at age 50? How much is the increase? What is the percent increase?

13. Practice 1 Answer Annual premium at age 45: $625.50 Annual premium at age 50: $876 Amount of increase: $250.50 Percent increase: 40%

14. Practice 2 Refer to Figure 11.2 above to find the annual premium for a 5-year term life policy. Heidi and Grant Hill are both 30 years old. They each purchase a 5-year term life insurance policy with $125,000 coverage. What is Heidi’s annual premium? What is Grant’s annual premium?

15. Practice 2 Answer Heidi’s annual premium: $266.25 Grant’s annual premium: $308.75

16. END OF SECTION 11-3 Term Life Insurance