Facts About Life Insurance  Purpose  What You Are Paying For  Who Needs It?

How Life Works

Using Life Insurance in Protecting the Farm Family  How much insurance is needed?  What kind of insurance do I buy?

Areas of Protection (DDIME)  Death Expenses  Debt cancellation (vs. transfer to heirs)  Income or lost services of the deceased  Mortgage  Education funds

What Kind of Life Insurance to Buy? The protection feature of life insurance if more important than the investment feature.

Permanent Life Insurance  Permanent life insurance is a general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid (include premium is paid (include a savings or investment a savings or investment element called cash value). element called cash value).

Cash Value Negatives No Cash Value for the first 2-3 years Negative return for 5-15 years. Average return is 1.3% Charged 6-8% interest to borrow your own money* Lose cash values when you die Typically 20% of the premium paid goes towards the cost of insurance and 80% goes to build a cash value that operates under the following rules:

Can You Afford Bundling

Term Life Insurance  Term life insurance is temporary life insurance provided for a specific period of time (also known at pure life insurance protection).

Insurance to Cover Farm Debt Only  Decreasing Term Insurance  Mortgage Insurance  Credit Insurance

Business Transfer Planning  Buy/Sell Agreements  Key-Person Insurance

Liquidation Versus Retention of Capital  Selling assets is a method of raising capital.  Retention is the retaining of assets.

Looking at My Current Policy  Type of insurance  Amount of Insurance  Premium – Is the premium level?  Length of Policy  Beneficiaries  Convertibility  Renewable

How to Pick a Life Insurance Agent  Does the agent take the time to get to know you and your needs?  Does the agent help you understand your options?  Does the agent present a clear analysis.  Do you feel pressured?  Do they have a license to sell insurance in your state?  A DON’T – “How Much Do You Have to Spend”

What to Consider When Replacing a Policy  Family needs change  Policy outdated  Your investment needs better met elsewhere  Several separate policies

Be Cautious About Replacement When…  You are in bad health, uninsurable, or considerably older.  You have a good, competitive policy and can’t get a better value for your money.  Never cancel your existing policy until the new one has been issued and delivered to you.  Your relationship with your agent is more important than having your family covered.

The bottom line…. When considering policy replacement, examine your options carefully! Most companies offer proposals that show the costs and provisions of the policy. As for these illustrations as you shop for the best value. Your goal is financial security – avoid spending more than necessary. Always consider what works best for you and your family – it’s your decision!

Summary – Tips for Making a Wise Insurance Purchase  Buy Adequate Coverage  Buy Only One Policy Per Family Example: 6 policies x $75 administrative fee = $450 1 policy with riders- $75 $375 With the $375 difference ($450 - $75 = $375), you could buy as much as $325,000 term life insurance at age 30 and pay a full year’s premium.

Summary – Tips for Making a Wise Insurance Purchase  Understand the purpose of life insurance on children  Avoid expensive “gimmicks”  Avoid insurance policies disguised as something else