Life insurance

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Life insurance

  1. 1. Life Insurance Why and When Do I Need It?
  2. 2. Life Insurance <ul><li>Life insurance is a contract that pays a beneficiary in the event of your death as long as the policy is in effect. </li></ul><ul><li>Life insurance is something you buy for those people you leave behind. Life insurance covers your expenses such as funeral and medical bills. You may also need to leave financial support to your family. </li></ul>
  3. 3. Who Needs It? <ul><li>If your: </li></ul><ul><li>Single - Consider life insurance for retirement and estate planning.  And if you’re young and healthy, now may be the best time to lock in a low rate. </li></ul><ul><li>Married or Getting Married - You are not in this alone anymore. Your spouse depends on you in lots of ways.  Losing you to an accident or illness would be a huge emotional loss for them. Having the right amount of life insurance can help make sure it’s not a huge financial loss as well. Isn’t it important to help secure your family’s future? </li></ul><ul><li>Buying A Home - Buying a home is one of the biggest purchases you may ever make. Did you know that life insurance can be used to help pay off your mortgage and keep your family in their home should something happen to you? </li></ul>
  4. 4. Types of Life Insurance <ul><li>Basically there are 2 types of life insurance: </li></ul><ul><li>Term </li></ul><ul><li>and </li></ul><ul><li>Whole Life </li></ul>
  5. 5. Term Life Insurance <ul><li>Term Insurance The most basic and least expensive type of life insurance. You buy coverage for a certain amount of time, such as 10, 15, 20 or 30 years. If you die before the term is over, your beneficiary gets the benefit stated in your policy. If you live beyond the term, the policy expires.  </li></ul><ul><li>Therefore, if you purchase a 30 year term policy at the age of 20 you will not have any life insurance beyond the age of 50 </li></ul>
  6. 6. Whole Life Insurance <ul><li>Whole life or Permanent Insurance This type of policy never expires. As long as premiums are paid, it remains in force. Premiums are usually based on your age at the time of purchase and generally remain level. In addition to providing a death benefit, premiums are also invested to produce returns – adding cash value to your policy. There are three major types of whole life or permanent life insurance: traditional whole life, universal life, and variable universal life. </li></ul>
  7. 7. Types of Whole Life <ul><li>Traditional Whole Life You'll pay the same amount of premium for the rest of your life. (Start young and the less expensive the premiums will be.) Your cash value will accumulate based on a guaranteed rate. As long as your policy is current, you can borrow against the  cash value  at the current policy loan interest rate. </li></ul><ul><li>Universal Life gives you more flexibility. You pay a set initial premium, but after that, you decide when and how much you want to pay. How does this work? The insurance company simply charges the insurance cost from your  cash value  account. </li></ul><ul><li>Variable Universal Life This insurance combines some features of policies to create a more flexible life insurance product. As with universal life policies, you decide, after the initial premium, when and how much more you want to pay into your policy. You can adjust the death benefit, plus you have the wide range of investment options. Your  cash value  will increase or decrease, depending on the performance of the underlying funds. </li></ul>
  8. 8. Filing a Claim <ul><li>Unfortunately, someday you may </li></ul><ul><li>responsible for dealing with the </li></ul><ul><li>loss of a loved one. </li></ul><ul><li>What are the four steps in filing a claim? </li></ul><ul><li>1. Obtain several copies of the death certificate. </li></ul><ul><li>2. Contact your insurance agent. </li></ul><ul><li>3. Submit a certified copy of the death certificate (or acceptable alternative in extraordinary circumstances) from the funeral director with the policy claim. </li></ul><ul><li>4. Once a life insurance claim is submitted, you will need to determine how the proceeds will be distributed. </li></ul>
  9. 9. Settlement Options <ul><li>In some cases there are four settlement options: </li></ul><ul><li>Lump sum: You receive the entire death benefit in a single amount, which allows you to use what you need for immediate expenses and invest the rest.  </li></ul><ul><li>Specific income provision: The life insurance company pays you both principal and interest on a predetermined schedule.  </li></ul><ul><li>Life income option: You receive a guaranteed income for life. The amount of income depends on the death benefit specified in the life insurance policy, your gender, and your age at the time of the insured's death.  </li></ul><ul><li>Interest income option: The company holds onto the proceeds and pays you interest. The death benefit remains intact and goes to a secondary beneficiary upon your death. </li></ul>
  10. 10. Medical Exams? <ul><li>Why do life insurance </li></ul><ul><li>companies generally require </li></ul><ul><li>medical exams? </li></ul><ul><li>You will be classified based on age, height, weight, nicotine use and other health factors, such as any history of high blood pressure or depression. Your health status will determine what rate class category you fit in, so even if you have some health problems, you could be covered. </li></ul>
  11. 11. Rating Class <ul><li>The rating class that you fit into will determine the price you pay in premiums. </li></ul><ul><li>As you can guess, a smoker </li></ul><ul><li>will pay a higher premium than </li></ul><ul><li>a non-smoker and an over-weight </li></ul><ul><li>person will pay more than a thin person. </li></ul><ul><li>Buying insurance when you are younger, healthier and a non-smoker will save you money in many ways. </li></ul>

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