Life Insurance “ Protecting Your Family”

1. Life Insurance“Protecting Your Family” Mr. Peterson

2. Review • Which of the following is NOT a major type of health insurance? • Workers’ Comp • Government Health Insurance Plans • Managed Care Plans • Private Insurance • None of the Above • Which of the following is a factor that would affect the cost of health care? • Previous job experience • Gender • Education • Both A and B • All of the above

3. Basic Purpose of Life Insurance • To protect you and your dependents from the financial consequences of losing assets or income when an accident, illness, or death occurs.

4. Vocab • Policyholder • Face Value • Amount for which the policy is written • Beneficiary

5. Benefits • Financial protection for dependents • Protection from creditors • Before death, cash value in life insurance policies usually protected against legal judgments and bankruptcy proceedings. • After death, possible to keep benefits out of estate and away from creditors. • Tax free unless withdrawn • Medium for savings

6. Do You Need Life Insurance? • Consider life insurance… • If you have dependents who count on your financial support. • If you have debts you would like to clear, like a home mortgage. • You may not need life insurance… • If no one depends on your support • If you are a child

7. Activity • Discuss these factors on how to evaluate an insurance company. Why do you think it is important to ask these questions? • Is the company respected? • Is the company financially sound? How do you know? • Do the benefits and options work for you? • Are the insurance agents certified? • Is the agent knowledgeable of the services? • What are the amounts and due dates of coverage?

8. Main Categories • Term • Protection for a specific period of time • When time is up, so is policy (cash value) • Permanent • Protection as long as premium is paid

9. Term Life Insurance • Level • Premium stays the same • Longer term, higher premium • Decreasing • Premiums remain the same while value decreases. • “Mortgage loan term”

10. Term Life • Renewable • Allows insured to renew policy without evidence of insurability • Pay higher premium • Convertible • Allows insured to convert to whole life policy without evidence of insurability Why do companies usually ask for evidence of insurability?

11. Advantages/Disadvantages • Economical way for young families to purchase large amounts of life insurance. • Provides for needs that will disappear over time. • Premiums become more costly as you get older. • Does not build cash value. Why buy term insurance?

12. Video! • http://www.youtube.com/watch?v=gvjir8yxPUI

13. Permanent • Whole Life • Provides death protection plus a savings feature called cash value. • Builds • If policy canceled prior to death, insured has right to cash value; this is the nonforfeitureright • Can borrow against • Benefits are reduced Would you use this as a retirement plan?

14. Variable Life • Provides death protection plus a savings, or cash value feature • Fixed premium • Cash value can be invested in a variety of mutual funds for greater possiblereturn • Can’t fall below the original amount What are the advantages/disadvantages?

15. Universal Life • Permits adjustments • Premium, face value, level of protection • Invested to earn interest at current market rates • Annual statement • Level of protection, cash value, interest earned, premium allocation • Flexible

16. Video • http://www.youtube.com/watch?v=5JtVAl6f8ro

17. Estimating Life Insurance Needs • Multiple-of-Earnings Method • Multiply annual earnings by an arbitrary number (usually 5-10) • Needs Analysis Method • Estimate needs and examine available resources

18. Key Features • Chart