By: Tyler, Maisie, Kenny, & Nikolai

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?

• 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:

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

2. have a mortgage or other large debts

3. have a large or complex estate

4. own a business or have a partner in a business

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Create Savings for your Spouse or Family Members:• Some types of life insurance create a cash value (can be borrowed or withdrawn on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• Age

• Gender

• Height & weight

• Medical record

• Personal habits (smoke, drink, drugs)

• Occupation

• Credit Rating

• Amount of coverage wanted

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

• 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

TERM: PROS AND CONSPROS CONS

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

• 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

WHOLE: PROS AND CONSPros Cons

VARIABLE LIFE INSURANCE• Also called Variable Appreciable Life Insurance

• Variable life polices build up cash reserve

• invest in any choice by insurance company.

• 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.

VARIABLE: PROS AND CONS

PROS CONS

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

• 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.

UNIVERSAL: PROS AND CONS

PROS CONS

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?

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

1. Licensed insurance agent

2. Internet

3. Direct mail

4. Bank

CHOOSING THE RIGHT ONE

• Three questions present difficulty for most life insurance buyers:

1. How big of a death benefit do I need?

2. How long do I need coverage?

3. Where should I buy life insurance?

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: $98.00 Female: 71.00

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

• Male

• Age 40

• 250000

• Whole life

• AIG direct

• $15.23 a month

• Female

• Age 40

• 250000

• Whole life

• AIG direct

• $12.23 a month

• 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

WHOLE LIFE COST

REAL LIFE STORIESThe 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• "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." Genworth Finacial. 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>.