1. Chapter 7 Insurance & Investments

2. 7.1 Life Insurance

3. Life Insurance – Policy – Death benefits (face value) – Premium – Beneficiary –

4. Types of Life Insurance Term protects for fixed amt of time (1, 5, 10 yrs) Less expensive Can be renewed, but more expensive (older means greater chance of dying) May not be renewed by comp if you’re ill (ex: cancer) One type is decreasing term (even less expensive; face value decreases over time; often used to cover mortgage) Whole Life (permanent life insurance) Protects for whole life More expensive Premiums paid your entire life One type is universal life (can pay in extra to invest; extra amt may earn enough to cover your premiums over time)

5. Example 1 (see annual premiums table, p. 283 from textbook) Shelly Burnam buys a $25,000 whole life insurance policy at age 25. Shelly does not smoke. What is her annual premium?

6. Net Cost of Insurance Dividend  amt insurance comp may pay back to you  Can either deduct that amt from premiums or can leave to invest or buy even more insurance Example 2 Tom paid $57 quarterly for a life insurance policy. His policy also paid a dividend of $14.80 at the end of the year. What was the net cost of his insurance policy for the year?

7. Life Insurance Cash Values

8. Example 3 (see cash value table, p. 285 from textbook) Using the cash value table, find the maximum amt you can borrow against your $100,000 policy if you had the policy for 20 years:

9. Wrap It Up