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LifeInsurancePlanning
Objectives
Identify the purpose of life insurance and
the reasons for buying it.
Multiple-of-Earnings Approach
TypesofLifeInsurancePolicies
12-8
TypesofLifeInsurancePolicies
(continued)
Adjustable
you can change your premium amount
and thus your coverage
Universal life
lets you pay premiums in almost any
amount
combines term insurance and
investment elements
DecreasingTermInsurance
ComparisonofTermvs.CashValue
TypesofPoliciesIssuedin1994*
Term
22%
Whole Life
45%
Decreasing
2.0%
Variable
2%
Universal
11%
Other Variable Universal
8% 12-12
10%
*1997 Insurance Fact Book
OtherTypesofLifeInsurancePolicies
Group life insurance
often through an employer
no physical required
usually term insurance
Credit life insurance
debt is paid off if you die
mortgage, car, furniture
also protects lenders
expensive protection
LifeInsuranceContractProvisions
Naming your beneficiary (one or more)
Length of grace period for late payments
Reinstatement of a lapsed policy if it has not
been turned in for cash
Suicide clause during first two years
Automatic premium loans
uses the accumulated cash value
to pay the premium if you do not
LifeInsuranceContractProvisions
(continued)
Misstatement of age provision
Policy loan provision
can borrow against your cash value
Rider to add or alter benefits
cost of living protection
Waiver of premium disability benefit
Accidental death benefit
pays twice the policy face amount
Guaranteed insurability option
Accelerated benefits
BuyingYourLifeInsurance
Look at your income, savings, group life
insurance, and Social Security benefits