Objective 4.02 Insurance Law Life Insurance Objective 4.02 Insurance Law

A person born today has a life expectancy 10 years longer than you do! Life insurance protects the standard of living of the survivors You still depend on your parents to help you get through life: College Car Allowance Clothes and STUFF

Life Insurance Provides income to dependents or other named beneficiaries in the event of the insured person’s death. Face value- the amount of protection stated in the policy Example: Marla buys a $100,000 face value life insurance policy. Marla dies. Marla’ s beneficiaries will get $100,000 in proceeds.

Life Insurance Beneficiaries The policyholder names a beneficiary Can be an individual or business Beneficiary receives proceeds from a life insurance claim. Proceeds is the money paid to a survivor by a life insurance policy. Contingent beneficiaries named in the policy are second in line if the beneficiary is deceased.

Life Insurance Beneficiaries What is a beneficiary in a life insurance policy? What happen if the beneficiary dies before or at the same time as the insured? Contingent Beneficiary What is a contingent beneficiary? If there are (3) contingent beneficiaries, how are the proceeds from an insured’s policy distributed if the primary beneficiary is deceased? Collecting Death Benefits How does a beneficiary collect any death benefits? What document must a beneficiary have in order to claim any death benefits for any insurance or other death benefits?

Life Insurance Advantages Face amount is paid as proceeds to beneficiary Proceeds are NOT taxable by income, estate or inheritance tax laws. Proceeds are paid direct to beneficiaries. Proceeds avoid probate.

Life insurance protects survivors against financial loss associated with death. Two basic types: Term Permanent

Term Life Insurance Term life is temporary insurance. Only pays if insured dies during policy period Purchased for a specific term (one year or multiple years) Usually renewable for another term Least expensive premium for most coverage Pure insurance, no savings add up

Increasing Term Insurance What is increasing term insurance? What is the benefit of this type of policy initially but not a benefit as the insured gets older?

Decreasing Term Insurance What is decreasing term insurance? How does this policy work for the insured? Why would a person purchase a decreasing term policy?

Level Term Insurance What is level term insurance? What are the advantages and disadvantages of this type of insurance?

Permanent - Whole Life Insurance Permanent insurance for lifetime of insured. Fixed Premium payments Excess premium creates savings called cash value. Cash value can be: Withdrawn by policyholder as loan Used to buy more paid up insurance Used to pay current premium

Permanent – Universal Life Insurance A bit greater flexibility compared to Whole Life Contribution to “cash value” or investment portion of account can vary Choices of options as to where to invest. whhttp://www.wisebread.com/universal-life-insurance-and-whole-life-insurance-a-comparisonere to invest

Permanent – Variable Life Insurance Variable Universal Life Insurance Life insurance that builds a cash value. Cash value can be invested in a wide variety of accounts – investment “varies” WORKSHEET: Life Insurance Decisions

Life Insurance Optional Rider Coverage Dependent Children What is a rider? What type of coverage does a rider provide for children? Spouse Rider What type of coverage does a rider provide for a spouse? Guaranteed Insurability What is guaranteed insurability? What are the advantages of guaranteed insurability?

Accidental Death & Dismemberment What does accidental death mean to you? What does accidental dismemberment mean to you? How is this coverage different than a traditional life insurance policy?

Other Types of Life Insurance Supplemental Information Limited pay life - stop paying after a specified # of years without lapse Endowment - lump sum paid in advance

Cost Factors for Life Insurance Type of insurance Age of insured Health of insured Gender (sex) of insured Face amount – Dollar amount of coverage provided by the life policy Company WORKSHEET: Life Insurance Puzzle WORKSHEET Life Insurance Terms – Fill-in Blanks WORKSHEET Life Insurance Terms – Fill-in Blanks