Chapter 25 Section 2 Aaliyah Brown

Life Insurance Life insurance involves a contract written between an insurance company and a policy holder. Face Value or the document specifies an amount of money to be paid in the event of the policyholder’s death. This also states the price of the policy (premium) and the name of the person (beneficiary) Insurance would help a family member or friend raise surviving children and perhaps provide them with higher education

Life Insurance cont. Term Insurance :is often called pure insurance because it provides protection only. Term insurance is less expensive Under term insurance, you pay as long as you need coverage. As you grow older, the likelihood of your dying increases. This is why term insurance premiums go up as you age. Premiums are low at first & then increase steadily as you get older.

Life Insurance cont. Cash-value Insurance: is permanent insurance because when the policy is paid up after a certain number of years, the policyholder owns the insurance If you are a plan called “Paid-Up at 65” You will pay premiums up until you reach 65, then at that point, you have a permanent policy that will pay the face value upon your death The interest rate however, is usually less than for other forms of savings. Cash-value insurance is more expensive as apposed to term insurance.

Homeowner’s Insurance For most people, a home is the largest expenditure in their budget. The basis for all homeowner’s insurance policies is coverage against the various damages or perils Liability coverage is another important part of homeowner’s insurance policies. Liability refers to legal responsibility for something, such as damages or cost

Homeowner’s insurance cont. Damage cause by aircraft Riot or civil commotion Fire or Lighting Windstorm Vandalism Explosion Smoke Theft These are the dangerous situations (perils) against which property is insured.

Check Point Describe an advantage and a disadvantage of term and cash value insurance Which type of term insurance has the same face value throughout the life of the policy? What four things are usually covered by homeowner’s insurance?