Insuring Your Life

**The basic purpose of insurance is to transfer the risk of serious losses. Insurance Policy- -Insurer agrees to reimburse the insured for any losses suffered according to specified terms. Insurance premium- -the amount of money that an individual or business must pay for an insurance policy. Grace Period- -if you miss a premium payment, you have 31 days to pay before you lose your coverage.

Life Insurance- -a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. Benefits of Life Insurance

Primary Beneficiary- -is a person that inherits the proceeds of a life insurance policy when the grantor dies. Secondary Beneficiary - -is a person that inherits proceeds of the life insurance policy if the primary beneficiary dies before the grantor does. Most people take insurance payoffs in one lump sum.

How Much Insurance Do I Need? **The most accurate method of determining how much life insurance you need is called Needs Analysis. Needs Analysis- -Involves considering a person’s financial obligations, available financial resources, and life insurance.

Two Types of Life Insurance Term Life- -cheaper premium - -premium amounts dependent on age and health - -only for a set amount of time (10,20,30 years) - -renewable clause-renews each year without evidence of insurability (health checks) 2. Whole Life- -must more costly but premium never changes - -set for life (usually to age 120) - -builds interest over time - -can cash it in early - -can borrow from it *Some companies offer life insurance to employees called group life insurance.

Life Insurance Exclusions Suicide Aviation War Hazardous Occupation or Hobby