Life insurance
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Life Insurance. By: Tyler, Maisie , Kenny, & Nikolai. What is Life insurance?. What is Life Insurance? Sum of money received by a beneficiary Based on monthly payments How Life Insurance Works The Insurance Company Give the beneficiary money when holder passes away Policy Holder

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Life Insurance

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Life insurance

Life Insurance

By: Tyler, Maisie, Kenny, & Nikolai


What is life insurance

What is Life insurance?

  • What is Life Insurance?

    • Sum of money received by a beneficiary

    • Based on monthly payments

  • How Life Insurance Works

    • The Insurance Company

      • Give the beneficiary money when holder passes away

    • Policy Holder

      • Makes monthly payments to insurance company

    • Beneficiary

      • Receive money after holder passes away


Who needs life insurance

Who needs life insurance?

  • MAY NOT NEED:

    • no financial dependents and probably will not in the foreseeable future

    • retired and living off investments or other income sources

    • A young child, unless child is earning income

  • NEED:

    • have dependents (children, spouse, partner, parents living with you, etc.)

    • have a mortgage or other large debts

    • have a large or complex estate

    • own a business or have a partner in a business


Why do we need life insurance

Why do we need life insurance?

  • Providing replacement income for your dependents

  • Create an inheritance for your heirs

  • Fund a retirement

  • As an employment benefit

    • To protect a business against the loss of a key employee

  • Create Savings for your Spouse or Family Members:

    • Some types of life insurance create a cash value (can be borrowed or withdrawn on the owner’s request)

  • To pay your final expenses:

    • funeral, estate costs, and medical costs not covered by health insurance


Risk factors

Risk Factors

  • Age

  • Gender

  • Height & weight

  • Medical record

  • Personal habits (smoke, drink, drugs)

  • Occupation

  • Credit Rating

  • Amount of coverage wanted


Term life insurance

Term Life Insurance

  • Less $ buys you a larger amount (affordable for young policyholders)

  • Set period of coverage called “term”

  • Policies can be cancelled or renewed at end of term

  • More expensive after each renewal

  • Does not earn cash value

  • Can be converted to permanent policy


Term pros and cons

Term: PROS AND CONS

PROS

CONS

  • difficult or impossible to get if you are in poor health.

  • some policies guarantee renewability until specific age.  

  • high monthly payment if smokes, serious health problems, obese.

  • at a young age ensures long coverage

  • low monthly payment


Whole life insurance

Whole Life Insurance

  • Whole Life Insurance=permanent life insurance protection

  • Less complicated options

  • Premiums do not change

  • Benefits do not change

  • Earns an accumulates cash value slowly

  • Offers lifetime coverage

  • Cannot be converted to a different policy

  • More costly


Whole pros and cons

WhoLE: Pros and Cons

Pros

Cons

  • not allowed to choose separate investment accounts

  • Not good at adapting insurance/retirement plans that change

  • Savings element (cash value) which grows tax-deferred.

  • Premiums won’t increase during lifetime


Variable life insurance

Variable Life insurance

  • Also called Variable Appreciable Life Insurance

  • Variable life polices build up cash reserve

  • invest in any choice by insurance company.


Variable pros and cons

Variable: Pros and cons

PROS

CONS

  • You assume the investment risks.

  • Can’t withdraw from cash value during lifetime.

  • Can apply interest earned on investments toward premiums

  • Potentially lowering the amount you pay.


Universal life insurance

Universal Life insurance

  • The most costly

  • Offers lifetime coverage

  • Cannot be converted to different policy

  • Flexible payments

  • Can make changes to benefits based on needs and lifestyle

  • Earns and accumulates cash value at guaranteed rate

  • The most options to tailor needs


Universal pros and cons

Universal: PROS AND CONS

PROS

CONS

  • You assume the investment risks.

  • Can’t withdraw from cash value during lifetime.

  • You assume the investment risks.

  • Can’t withdraw from cash value during lifetime.


What does life insurance cover

What does life Insurance cover?

  • Beneficiary

    • The money that is paid out from the policy will go to the beneficiary: an estate, spouse, or children.

  • Charitable causes

    • Some build a lump sum of money up to donate to a charity.

  • Final expenses

    • Covers burial and funeral costs, as well as medical bills not covered under health insurance.

  • Death taxes

    • Some use to pay their estate taxes, so that their family doesn't have to liquidate any property to pay the tax bill.

  • Inheritance

    • An inheritance is started by naming your policy after the beneficiary. The money earned on this policy will go to the heir.

  • Dependents

    • Life insurance is important to your dependents, especially if they solely depend on you financially.


Where do i purchase life insurance

Where do I purchase Life Insurance?

  • Life insurance may be purchased from an insurance company through…

    • Licensed insurance agent

    • Internet

    • Direct mail

    • Bank


Choosing the right one

Choosing The right one

  • Three questions present difficulty for most life insurance buyers:

    • How big of a death benefit do I need?

    • How long do I need coverage?

    • Where should I buy life insurance?


Term costs

Term COsts

  • 25 year old $500,000 coverage- Male: $20.00 Female: $18.00

  • 40 year old $500,000 coverage- Male: $40.00 Female: $32.00

  • 50 year old 500,000 coverage- Male: $98.00Female: 71.00

  • 60 year old $500,000 coverage- Male: $290.00 Female: $190.00


Whole life cost

WHOLE LIFE COST

  • Male

    • Age 50

    • 1,390,000 coverage

    • Whole life

    • Gensworth Financial

    • $169 a month

  • Female

    • Age 50

    • 1,390,000 coverage

    • Whole life

    • Gensworth financial

    • $149 a month

  • Male

    • Age 40

    • 250000

    • Whole life

    • AIG direct

    • $15.23 a month

  • Female

    • Age 40

    • 250000

    • Whole life

    • AIG direct

    • $12.23 a month


Real life stories

Real Life Stories

The John Darwin Story- The John Darwin disappearance case was an investigation into the faked death of a former teacher and prison officer John Darwin, who turned up alive in December 2007, five years after he was thought to have died in a canoeing accident.


Sources

SOURCES

  • "Understanding and Choosing Life Insurance." Financial Planning: A Comprehensive Guide to Personal Finance. Web. 19 Dec. 2011. <http://financialplan.about.com/cs/insuranc1/a/LifeInsurance.htm>.

  • "Why Do We Need Insurance - Life, Auto, Disability | Cheap Auto Insurance." Cheap Insurance HQ - Your Cheap Insurance Headquarters | Auto Insurance | Home | Life | Health. Web. 19 Dec. 2011. <http://www.cheapinsurancehq.com/Why-Do-We-Need-Insurance.html>.

  • "What Is Life Insurance?" Life Insurance - Term Life Insurance - Whole Life Insurance - Life Insurance Quotes. Web. 19 Dec. 2011. <http://www.lifeinsurancewiz.com/LifeInsurance/what.htm>.

  • "HowStuffWorks "Who Needs Life Insurance?"" HowStuffWorks "Business & Money" Web. 19 Dec. 2011. <http://money.howstuffworks.com/personal-finance/financial-planning/life-insurance2.htm>.

  • "Life Insurance Calculator." GenworthFinacial. n.d. Web. 16 Dec. 2011. <http://www.genworth.com/content/products/lifeinsurance/how_much_life_insurance_do_i_need/life_insurance_calculator.html?action=calculateMonthly&age=50&gender=female&qualident=CenterContent.31026>.

  • "Life Insurance." Wikipedia. n.d. Web. 16 Dec. 2011. <http://en.wikipedia.org/wiki/Life_insurance>.

  • "Life Insurance ." statefarm. n.p., n.d. Web. 16 Dec. 2011. <http://www.statefarm.com/insurance/life_annuity/life/life.asp>.

  • "How Much Will Life Insurance Cost Me?" CNNMoney - Business, Financial and Personal Finance News. 04 Sept. 2008. Web. 19 Dec. 2011. <http://money.cnn.com/retirement/guide/insurance_life.moneymag/index9.htm>.

  • Term4Sale - Instant Term Life Insurance Comparisons. Web. 19 Dec. 2011. <http://www.term4sale.com/>.

  • "Still A Colliery And Not A Town." Three Score Years And Ten. Web. 19 Dec. 2011. <http://threescoreyearsandten.blogspot.com/2011/01/still-colliery-and-not-town.html>.


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