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Published byVirgil Washington Modified over 6 years ago
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“Life as we know it” Exploring the different types of life insurance
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Today’s Agenda… A History Lesson Whole Life Term Life Universal Life
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The history of life insurance
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Life history… The Presbyterian Synod of Philadelphia sponsored the first life insurance corporation in America for the benefit of Presbyterian ministers and their dependents. 1837 – The Panic of 1837 leads to Mutualization of Life Insurance between 1838 – Met Life, New York Life, Mass Mutual and John Hancock all formed. 1858 – A.P. Giannini, the founder of Transamerica, brings life insurance and financial services to the “common man”. 1861–1865 – The Civil War leads to the creation of Non-Forfeiture Laws.
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Life history continued…
1930s – Life Insurance reaches a peak before Great Depression when 120 million policies are in place…a 1:1 ratio to the amount of people living in the US at the time. 1965 – Serviceman’s Group Life Insurance (SGLI) formed This is also when the concept of “Buy Term and Invest the Difference” was formed. 1977 – A.L. Williams founds A.L. Williams and Associates under the BTID Concept (later became Primerica). 1979 – E.F. Hutton pioneers “Total Life”…also known as Universal Life.
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WL Whole Life Insurance
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Whole Life history… 1837 – The Panic of 1837 leads to Mutualization of Life Insurance between 1838 – Met Life, New York Life, Mass Mutual and John Hancock all formed. 1858 – A.P. Giannini, the founder of Transamerica, brings life insurance and financial services to the “common man”. 1861–1865 – The Civil War leads soon after to the creation of Non-Forfeiture Laws.
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Whole Life Quick Facts…
Fixed, Level Premium Guaranteed Death Benefit to Age 121 Endowment…Cash Value = Death Age 121 Guaranteed Cash Values Guaranteed Insurability through OPAIs Ages 25, 28, 31, 34, 37 & 40 Contingent, Marriage & Stork Options Guaranteed Non-Forfeiture Values Reduced Paid-Up Insurance Cash Value Extended Term Insurance
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More on OPAI… OPAI – Option to Purchase Additional Insurance
Client has the opportunity to purchase additional insurance at pre-determined option dates AND without proof of insurability Standard Option Ages 22, 25, 28, 31, 34, 37 & 40 Contingent Option Ages 43, 43 & 49 Marriage & Stork Options Separation of Service / Retirement Option Conversion option amounts Vary by carrier May typically convert a minimum of $5k and up to the OPAI option face amount
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More on Non-Forfeiture Options…
Guaranteed Cash Values Reduced Paid-Up Client stops paying premiums Death Benefit is reduced Cash value continues to grow Extended Term Insurance Death Benefit remains level but only lasts for a specified period of time Cash Value goes away
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Whole Life …
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Whole Life … Policy Endows @ Age 121 Level, Guaranteed Death Benefit
Guaranteed Cash Value Level, Fixed Premiums to Age 100 100 121
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Whole Life Purposes… To provide permanent protection to a surviving spouse/beneficiary: Funeral Expenses Income Protection Estate Planning Add insurance without proof of insurability Create control for life’s “what-ifs” Great for Ages 0-50.
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Why Whole Life… Provides a guaranteed, permanent death benefit
Guaranteed cash values and non-forfeiture options provide additional control compared to other options OPAI provides future, guaranteed insurability of up to $1M+ dollars
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TERM Term Life Insurance
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term Life history… 1965 – Serviceman’s Group Life Insurance (SGLI) formed This is also when the concept of “Buy Term and Invest the Difference” was formed. 1977 – A.L. Williams founds A.L. Williams and Associates under the BTID Concept (later became Primerica).
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term Life Quick Facts… Insurance in its purest form
Increasing or Level Premiums Guaranteed Death Benefit for “term” selected No Cash Value No guaranteed insurability options Can be convertible to permanent life insurance Whole Life Universal Life
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Term life… Level, Guaranteed Death Benefit
Annually Increasing Premiums Term life… Level Premiums to End of Term Level, Guaranteed Death Benefit Decreasing Gtd. Death Benefit Level Premiums to Specified Age 20 Years Age 65
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Types of term… Annual Renewable Term (ART) Level Term (LT)
Lowest starting premium Premium Increases on an annual basis Coverage typically provided until a certain age though costs rise quickly Level Term (LT) Highest starting premium Premium remains level for 10,15,20,25 or 30 Year Term Coverage becomes ART at end of Term Period Decreasing Term (DT) Premium falls between ART & LT Premium remains level until specified age Coverage decreases each year on a linear basis
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term Life Purposes… To provide temporary protection to a surviving spouse/beneficiary: Pay off Debts Mortgage Protection College Education Child Care Supplement Permanent Insurance to meet client’s budget Can be applicable at any age
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Why level term… Only option that provides the best of both worlds:
A Level DB for a specified period of time & A Level Premium for that same specified time period Can meet specified need for specified finite period EX: $400k 30 Year Mortgage Typically convertible until end of term period or Age 65 Whichever comes 1st Convertible to all permanent policies offered at time of conversion No proof of insurability necessary
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universal Life Insurance
UL universal Life Insurance
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Universal Life history…
1979 – E.F. Hutton pioneers “Total Life”…also known as Universal Life.
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Universal Life Quick Facts…
Flexible, Adjustable Premiums In amount paid each year & In pay period Death Benefit may or may not be Guaranteed Cash Values are interest rate driven Combines term element & investment element
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Guaranteed universal life…
Level Death Benefit BUT Premiums are adjustable Typically Level Premiums to Age 100… Gtd. Cash Value 65 100 121
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universal Life Purposes…
To provide permanent protection to a surviving spouse/beneficiary: Funeral Expenses Income Protection Estate Planning Stripped Down Permanent Insurance helps budget (think “Term to 121”). Great for Ages 50+
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Why GUL… Gtd. Permanent Death Benefit as long as NLG Premium paid regardless of Cash Value performance. Least expensive form of Universal Life “Term to 121”
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