1. Life Insurance
Personal Finance

2. Why?
If someone (anyone) will suffer a financial burden if (when) you die
Last expenses
Unpaid bills
Mortgage
Lost income
Education of children
Business continuation
Estate taxes

3. How Much?
Look at the list on the prior slide and total what your needs would be
Many financial planners use 5x annual income as a reasonable approximation if you have a family
Needs change during your life

4. Premiums
If premiums are paid with after-tax dollars, the benefits are totally income-tax free (but may be subject to estate taxes)
Premiums are based on:
Age
Sex
Health
Occupation
Type of insurance
Amount of insurance
Tobacco habits

5. Things to Consider Beneficiary must have an insurable interest
Policy is usually incontestable after two years
Suicide during the first two years usually isn’t covered
Misstatements of age, health, smoking, etc. on the application can invalidate the policy during the first two years
Waiver of premium benefit is often automatic but can be removed
Accidental death insurance is usually not a good idea
Second-to-die helps with estate taxes
Guaranteed insurability option is good if you think you’ll need more coverage later

6. Things to Consider
Insurance is only a promise – and a long one at that
Make sure the company making the promise will be there
A knowledgeable and helpful agent is worth something
But remember how they get paid
There is always a 10-day free-look
Insurance is for insurance – not primarily for savings