Post on 18-Dec-2015
By: Tyler, Maisie, Kenny, & Nikolai
LIFE INSURANCE
WHAT IS LIFE INSURANCE?
• What is Life Insurance?
• Sum of money received by a beneficiary
• Based on monthly payments
• How Life Insurance Works
• The Insurance Company
• Give the beneficiary money when holder passes away
• Policy Holder
• Makes monthly payments to insurance company
• Beneficiary
• Receive money after holder passes away
WHO NEEDS LIFE INSURANCE?
• MAY NOT NEED:
• no financial dependents and probably will not in the foreseeable future
• retired and living off investments or other income sources
• A young child, unless child is earning income
• NEED:
1. have dependents (children, spouse, partner, parents living with you, etc.)
2. have a mortgage or other large debts
3. have a large or complex estate
4. own a business or have a partner in a business
WHY DO WE NEED LIFE INSURANCE?
• Providing replacement income for your dependents
• Create an inheritance for your heirs
• Fund a retirement
• As an employment benefit• To protect a business against the loss of a key employee
• Create Savings for your Spouse or Family Members:• Some types of life insurance create a cash value (can be borrowed or withdrawn on
the owner’s request)
• To pay your final expenses:
• funeral, estate costs, and medical costs not covered by health insurance
RISK FACTORS• Age
• Gender
• Height & weight
• Medical record
• Personal habits (smoke, drink, drugs)
• Occupation
• Credit Rating
• Amount of coverage wanted
TERM LIFE INSURANCE• Less $ buys you a larger amount (affordable for young
policyholders)
• Set period of coverage called “term”
• Policies can be cancelled or renewed at end of term
• More expensive after each renewal
• Does not earn cash value
• Can be converted to permanent policy
• difficult or impossible to get if you are in poor health.
• some policies guarantee renewability until specific age.
• high monthly payment if smokes, serious health problems, obese.
• at a young age ensures long coverage
• low monthly payment
TERM: PROS AND CONSPROS CONS
WHOLE LIFE INSURANCE• Whole Life Insurance=permanent life insurance protection
• Less complicated options
• Premiums do not change
• Benefits do not change
• Earns an accumulates cash value slowly
• Offers lifetime coverage
• Cannot be converted to a different policy
• More costly
• not allowed to choose separate investment accounts
• Not good at adapting insurance/retirement plans that change
• Savings element (cash value) which grows tax-deferred.
• Premiums won’t increase during lifetime
WHOLE: PROS AND CONSPros Cons
VARIABLE LIFE INSURANCE• Also called Variable Appreciable Life Insurance
• Variable life polices build up cash reserve
• invest in any choice by insurance company.
• You assume the investment risks.
• Can’t withdraw from cash value during lifetime.
• Can apply interest earned on investments toward premiums
• Potentially lowering the amount you pay.
VARIABLE: PROS AND CONS
PROS CONS
UNIVERSAL LIFE INSURANCE
• The most costly
• Offers lifetime coverage
• Cannot be converted to different policy
• Flexible payments
• Can make changes to benefits based on needs and lifestyle
• Earns and accumulates cash value at guaranteed rate
• The most options to tailor needs
• You assume the investment risks.
• Can’t withdraw from cash value during lifetime.
• You assume the investment risks.
• Can’t withdraw from cash value during lifetime.
UNIVERSAL: PROS AND CONS
PROS CONS
WHAT DOES LIFE INSURANCE COVER?
• Beneficiary
• The money that is paid out from the policy will go to the beneficiary: an estate, spouse, or children.
• Charitable causes
• Some build a lump sum of money up to donate to a charity.
• Final expenses
• Covers burial and funeral costs, as well as medical bills not covered under health insurance.
• Death taxes
• Some use to pay their estate taxes, so that their family doesn't have to liquidate any property to pay the tax bill.
• Inheritance
• An inheritance is started by naming your policy after the beneficiary. The money earned on this policy will go to the heir.
• Dependents
• Life insurance is important to your dependents, especially if they solely depend on you financially.
WHERE DO I PURCHASE LIFE INSURANCE?
•Life insurance may be purchased from an insurance company through…
1. Licensed insurance agent
2. Internet
3. Direct mail
4. Bank
CHOOSING THE RIGHT ONE
• Three questions present difficulty for most life insurance buyers:
1. How big of a death benefit do I need?
2. How long do I need coverage?
3. Where should I buy life insurance?
TERM COSTS• 25 year old $500,000 coverage- Male: $20.00
Female: $18.00
• 40 year old $500,000 coverage- Male: $40.00 Female: $32.00
• 50 year old 500,000 coverage- Male: $98.00 Female: 71.00
• 60 year old $500,000 coverage- Male: $290.00 Female: $190.00
• Male
• Age 40
• 250000
• Whole life
• AIG direct
• $15.23 a month
• Female
• Age 40
• 250000
• Whole life
• AIG direct
• $12.23 a month
• Male
• Age 50
• 1,390,000 coverage
• Whole life
• Gensworth Financial
• $169 a month
• Female
• Age 50
• 1,390,000 coverage
• Whole life
• Gensworth financial
• $149 a month
WHOLE LIFE COST
REAL LIFE STORIESThe John Darwin Story- The John Darwin disappearance case was an investigation into the
faked death of a former teacher and prison officer John Darwin, who turned up alive in December 2007, five years after he was thought to have died in a canoeing accident.
SOURCES• "Understanding and Choosing Life Insurance." Financial Planning: A Comprehensive Guide to Personal Finance . Web. 19 Dec. 2011.
<http://financialplan.about.com/cs/insuranc1/a/LifeInsurance.htm>.
• "Why Do We Need Insurance - Life, Auto, Disability | Cheap Auto Insurance." Cheap Insurance HQ - Your Cheap Insurance Headquarters | Auto Insurance | Home | Life | Health . Web. 19 Dec. 2011. <http://www.cheapinsurancehq.com/Why-Do-We-Need-Insurance.html>.
• "What Is Life Insurance?" Life Insurance - Term Life Insurance - Whole Life Insurance - Life Insurance Quotes . Web. 19 Dec. 2011. <http://www.lifeinsurancewiz.com/LifeInsurance/what.htm>.
• "HowStuffWorks "Who Needs Life Insurance?"" HowStuffWorks "Business & Money" Web. 19 Dec. 2011. <http://money.howstuffworks.com/personal-finance/financial-planning/life-insurance2.htm>.
• "Life Insurance Calculator." Genworth Finacial. n.d. Web. 16 Dec. 2011. <http://www.genworth.com/content/products/lifeinsurance/how_much_life_insurance_do_i_need/life_insurance_calculator.html?action=calculateMonthly&age=50&gender=female&qualident=CenterContent.31026>.
• "Life Insurance." Wikipedia. n.d. Web. 16 Dec. 2011. <http://en.wikipedia.org/wiki/Life_insurance>.
• "Life Insurance ." statefarm. n.p., n.d. Web. 16 Dec. 2011. <http://www.statefarm.com/insurance/life_annuity/life/life.asp>.
• "How Much Will Life Insurance Cost Me?" CNNMoney - Business, Financial and Personal Finance News . 04 Sept. 2008. Web. 19 Dec. 2011. <http://money.cnn.com/retirement/guide/insurance_life.moneymag/index9.htm>.
• Term4Sale - Instant Term Life Insurance Comparisons . Web. 19 Dec. 2011. <http://www.term4sale.com/>.
• "Still A Colliery And Not A Town." Three Score Years And Ten. Web. 19 Dec. 2011. <http://threescoreyearsandten.blogspot.com/2011/01/still-colliery-and-not-town.html>.