mr. peterson. which of the following is not a major type of health insurance? a. workers’ comp b....
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Mr. Peterson
Life Insurance“Protecting Your Family”
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ReviewWhich of the
following is NOT a major type of health insurance?
A. Workers’ CompB. Government Health
Insurance PlansC. Managed Care
PlansD. Private InsuranceE. None of the Above
Which of the following is a factor that would affect the cost of health care?
A. Previous job experience
B. GenderC. EducationD. Both A and BE. All of the above
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To protect you and your dependents from the financial consequences of losing assets or income when an accident, illness, or death occurs.
Basic Purpose of Life Insurance
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PolicyholderFace Value
Amount for which the policy is writtenBeneficiary
Vocab
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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 withdrawnMedium for savings
Benefits
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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 supportIf you are a child
Do You Need Life Insurance?
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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?
Activity
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TermProtection for a specific period of timeWhen time is up, so is policy (cash value)
PermanentProtection as long as premium is paid
Main Categories
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LevelPremium stays the sameLonger term, higher premium
DecreasingPremiums remain the same while value
decreases.“Mortgage loan term”
Term Life Insurance
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RenewableAllows insured to renew policy without
evidence of insurabilityPay higher premium
ConvertibleAllows insured to convert to whole life policy
without evidence of insurability
Why do companies usually ask for evidence of insurability?
Term Life
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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?
Advantages/Disadvantages
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http://www.youtube.com/watch?v=gvjir8yxPUI
Video!
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Whole LifeProvides 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 nonforfeiture right
Can borrow againstBenefits are reduced
Would you use this as a retirement plan?
Permanent
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Provides death protection plus a savings, or cash value feature
Fixed premiumCash value can be invested in a variety of
mutual funds for greater possible returnCan’t fall below the original amount
What are the advantages/disadvantages?
Variable Life
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Permits adjustmentsPremium, face value, level of protection
Invested to earn interest at current market rates
Annual statementLevel of protection, cash value, interest
earned, premium allocationFlexible
Universal Life
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http://www.youtube.com/watch?v=5JtVAl6f8ro
Video
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Multiple-of-Earnings MethodMultiply annual earnings by an arbitrary
number (usually 5-10)Needs Analysis Method
Estimate needs and examine available resources
Estimating Life Insurance Needs
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Key FeaturesChart