facts about life insurance

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Facts About Life Facts About Life Insurance Insurance Purpose Purpose What You Are Paying For What You Are Paying For Who Needs It? Who Needs It?

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Facts About Life Insurance. Purpose What You Are Paying For Who Needs It?. How Life Works. Using Life Insurance in Protecting the Farm Family. How much insurance is needed? What kind of insurance do I buy?. Areas of Protection (DDIME). Death Expenses - PowerPoint PPT Presentation

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Page 1: Facts About Life Insurance

Facts About Life InsuranceFacts About Life Insurance

PurposePurpose What You Are Paying ForWhat You Are Paying For Who Needs It?Who Needs It?

Page 2: Facts About Life Insurance

How Life

Works

Page 3: Facts About Life Insurance

Using Life Insurance in Protecting Using Life Insurance in Protecting the Farm Familythe Farm Family

How much insurance is needed?How much insurance is needed? What kind of insurance do I buy?What kind of insurance do I buy?

Page 4: Facts About Life Insurance

Areas of Protection (DDIME)Areas of Protection (DDIME)

Death ExpensesDeath Expenses Debt cancellation (vs. transfer to heirs)Debt cancellation (vs. transfer to heirs) Income or lost services of the deceasedIncome or lost services of the deceased MortgageMortgage Education fundsEducation funds

Page 5: Facts About Life Insurance

What Kind of Life Insurance to What Kind of Life Insurance to Buy?Buy?

The protection feature of life The protection feature of life insurance if more important than insurance if more important than

the investment feature.the investment feature.

Page 6: Facts About Life Insurance

Permanent Life InsurancePermanent Life Insurance

Permanent life insurancePermanent life insurance is a general term is a general term used to refer to various forms of whole life used to refer to various forms of whole life insurance policies that remain in effect to insurance policies that remain in effect to age 100 so long as theage 100 so long as the

premium is paid (includepremium is paid (include a savings or investmenta savings or investment element called cash value).element called cash value).

Page 7: Facts About Life Insurance

Cash Value NegativesCash Value Negatives

No Cash Value for the first 2-3 years

Negative return for 5-15 years. Average return is 1.3%

Charged 6-8% interest to borrow your own money*

Lose cash values when you die

Typically 20% of the premium paid goes towards the cost of insurance and 80% goes to build a cash value that operates under the following rules:

Page 8: Facts About Life Insurance

Can You Afford BundlingCan You Afford Bundling

Page 9: Facts About Life Insurance

Term Life InsuranceTerm Life Insurance

Term life insuranceTerm life insurance is temporary life is temporary life insurance provided for a specific period of insurance provided for a specific period of time (also known at pure life insurance time (also known at pure life insurance protection). protection).

Page 10: Facts About Life Insurance

Insurance to Cover Farm Debt OnlyInsurance to Cover Farm Debt Only

Decreasing Term InsuranceDecreasing Term Insurance Mortgage InsuranceMortgage Insurance Credit InsuranceCredit Insurance

Page 11: Facts About Life Insurance

Business Transfer PlanningBusiness Transfer Planning

Buy/Sell AgreementsBuy/Sell AgreementsKey-Person InsuranceKey-Person Insurance

Page 12: Facts About Life Insurance

Liquidation Versus Liquidation Versus Retention of CapitalRetention of Capital

Selling assets is a method of Selling assets is a method of raising capital.raising capital.

Retention is the retaining of Retention is the retaining of assets.assets.

Page 13: Facts About Life Insurance

Looking at My Current PolicyLooking at My Current Policy

Type of insuranceType of insurance Amount of InsuranceAmount of Insurance Premium – Is the premium level?Premium – Is the premium level? Length of PolicyLength of Policy BeneficiariesBeneficiaries ConvertibilityConvertibility RenewableRenewable

Page 14: Facts About Life Insurance

How to Pick a Life Insurance AgentHow to Pick a Life Insurance Agent

Does the agent take the time to get to know you Does the agent take the time to get to know you and your needs?and your needs?

Does the agent help you understand your options?Does the agent help you understand your options? Does the agent present a clear analysis.Does the agent present a clear analysis. Do you feel pressured?Do you feel pressured? Do they have a license to sell insurance in your Do they have a license to sell insurance in your

state?state? A DON’TA DON’T – “How Much Do You Have to Spend” – “How Much Do You Have to Spend”

Page 15: Facts About Life Insurance

What to Consider When What to Consider When Replacing a PolicyReplacing a Policy

Family needs changeFamily needs change Policy outdatedPolicy outdated Your investment needs better met Your investment needs better met

elsewhereelsewhere Several separate policiesSeveral separate policies

Page 16: Facts About Life Insurance

Be Cautious About Replacement Be Cautious About Replacement When…When…

You are in bad health, uninsurable, or You are in bad health, uninsurable, or considerably older.considerably older.

You have a good, competitive policy and You have a good, competitive policy and can’t get a better value for your money.can’t get a better value for your money.

Never cancel your existing policy until the Never cancel your existing policy until the new one has been issued and delivered to new one has been issued and delivered to you.you.

Your relationship with your agent is more Your relationship with your agent is more important than having your family covered.important than having your family covered.

Page 17: Facts About Life Insurance

The bottom line….The bottom line….

When considering policy replacement, When considering policy replacement, examine your options carefully! Most examine your options carefully! Most

companies offer proposals that show the companies offer proposals that show the costs and provisions of the policy. As for costs and provisions of the policy. As for

these illustrations as you shop for the best these illustrations as you shop for the best value. Your goal is financial security – avoid value. Your goal is financial security – avoid

spending more than necessary. Always spending more than necessary. Always consider what works best for you and your consider what works best for you and your

family – it’s your decision!family – it’s your decision!

Page 18: Facts About Life Insurance

Summary – Tips for Making a Wise Summary – Tips for Making a Wise Insurance PurchaseInsurance Purchase

Buy Adequate CoverageBuy Adequate Coverage Buy Only One Policy Per FamilyBuy Only One Policy Per Family

Example:6 policies x $75 administrative fee = $4501 policy with riders - $75

$375With the $375 difference ($450 - $75 = $375), you could buy as much as $325,000 term life insurance at age 30 and pay a full year’s premium.

Page 19: Facts About Life Insurance

Summary – Tips for Making a Wise Summary – Tips for Making a Wise Insurance PurchaseInsurance Purchase

Understand the purpose of life insurance on Understand the purpose of life insurance on childrenchildren

Avoid expensive “gimmicks”Avoid expensive “gimmicks” Avoid insurance policies disguised as Avoid insurance policies disguised as

something elsesomething else