1. Section 3

2. The Life Insurance Policy - contract between insurance company and insured -major elements of a life insurance policy -name of the insured -amount of coverage -cost of insurance -name of the beneficiary Life Insurance Principles

3. Beneficiary Selection -beneficiary -the person named in the policy to receive the insurance benefits -you can also insure the life of a person in whom you have an insurable interest -to have insurable interest, you must receive some kind of financial benefit from the person’s continued life Life Insurance Principles

4. Term Life Insurance -insurance that provides financial protection from losses resulting from a death during a definite period or term -least expensive form of life insurance -only type of life insurance that’s purely life insurance -all other insurances hav savings or investment features -term can run from 1 to 20 yrs or more -protection ends when term ends Types of Insurance

5. Term Life Insurance continued… -you can purchase Renewable Term Insurance -don’t have to take another physical -you can purchase Level Term Insurance -amount of protection and premiums remain the same -you can purchase Decreasing Term Insurance -amount of protection gradually goes down but premium remains the same -appropriate for adults w/ children Types of Insurance

6. Permanent Life Insurance -has cash value and an investment feature -insurance companies invest remaining part of premium that’s not need to pay for coverage -this money is added to the cash value of the insurance policy -cash value refers to amount of money the insurance will pay if the policyholder decides the insurance is not needed -longer you keep a policy the higher its cash value -you can also borrow money up to your cash value Types of Insurance

7. Permanent Life Insurance Continued… -permanent life insurance can be scene as a savings plan -return on cash value on your money is not large -this plan has a built-in savings feature encouraging saving -permanent life comes in the form of -whole life -variable life -universal life Types of Insurance

8. Permanent Life Insurance -Whole Life Insurance - permanent insurance that expands over a lifetime -ordinary life insurance remains the same each yr -limited-payments policies can be designated by the number of yrs the policyholder agrees to pay Types of Insurance

9. Permanent Life Insurance -Variable Life Insurance - investment plan that resembles an investment portfolio -Lets policy holder choose investments -both death benefit and cash value rise and fall depending on success of investment -might guarantee a minimum death benefit -strong rate of return on invested account and could increase cash value and death benefit Types of Insurance

10. Permanent Life Insurance -Universal Life Insurance - provides both insurance protection and a substantial savings plan -Payment is split 3 ways -pays for insurance protection -expenses -goes into interest-earning investments -investment portion earns a variable rate return - this could rise or fall depending on economy Types of Insurance

11. Group Life Insurance - an insurance policy that covers a group of people -is less than buying individual -most group insurance offers term rather than permanent -the whole company buys then individuals from the company can decide if they want to join and pay their share Types of Insurance

13. Coverage Amount -anyone with dependents needs life insurance -a dependent is a person who must rely on another for financial support -questions to help determine the need for life insurance -how much money is required for your dependents’ financial stability if your income is lost -how much income will you need when you retire and what will be the source of your income -what can you afford to pay for your life insurance needs Buying Life Insurance

14. Life Insurance Application - to buy individual life insurance you have to complete this application -apply through insurance agent -may have to take a physical exam -if no serious problems you pay premium and receive coverage -if work at a high risk job or have poor health you might be able to get insurance but will have to pay a much higher rate Buying Life Insurance

15. Premium Payments -type of policy and age affects cost -older you are higher the cost - example -in purchasing a whole life policy, life insurance is higher than those for term insurance, but annual premium stays the same throughout insured life Buying Life Insurance