life insurance. today’s learning objective how does life insurance work? life insurance basics...
TRANSCRIPT
Life Insurance
Today’s Learning ObjectiveHow does life insurance work?• Life Insurance Basics• Calculating Life Insurance Needs• Term Life Policies• Whole Life Policies• Getting a Life Insurance Policy
Life Insurance
• Provides money that is paid upon death of the insured to a person identified in the policy– beneficiary - person who receives
payment of the life insurance• Can designate multiple beneficiaries
– You designate the percent of the policy amount each beneficiary gets
Purpose of Life Insurance
• Normally used to– Provide family members money to live
desired lifestyle in case of untimely death of insured
– Provide business partners money to cover potential losses due to loss of partner
Determining Life Insurance Needs
• Determine what you want beneficiary to be able to do– Cover funeral costs– Pay off debt (house, car, credit cards, etc.)– Replace earnings that deceased would
have earned (amount per year, number of years)
– Pay for college– Etc.
• Determine what beneficiary will already have available– Current income– Savings– Investments– Etc.
• Determine what amount of life insurance you need to get to cover what already won’t be available
Assignment #1
Analyzing Financial Needs worksheet
Types of Life Insurance
Term Life Insurance• Insurance protection provided for a
specified period of time• Payment made only if death occurs
during the time the policy is in effect– example: if you have a 20-year term life policy and
you die a week after the policy concludes, you get nothing
• If you pay on the policy for the entire 20 years and do not die, you get nothing back– this insurance is not an investment, just protection
against risk
Whole Life Insurance
• Provides insurance coverage during the entire life of the insured, as long as premiums are being paid– Straight life – pay during entire life– Limited-pay life – pay up to specified age; policy
covers until death with no additional premiums paid
• builds up cash value• insured gets cash if policy is terminated early
Getting a Life Insurance Policy
• Contact an agent with a life insurance company– Local office– Online
• All named insured on policy will have to get a physical exam prior to the premium being set and policy issued– Health issues will result in higher premiums– Poor family health history will result in
higher premiums– Older age will result in higher premiums
Risk Management for Life Insurance
• Risk Reduction– Take actions to reduce chances of untimely death
• Maintain healthy lifestyle• Minimize risk associated with potentially deadly activities
• Risk Transfer– Obtain insurance to pay beneficiary desired
amount
• Risk Retention– Any expenses beyond desired amount– Death beyond end date of policy (term life only)
www.intelliquote.com
Assignment #2
Life Insurance Quote Activity