Life Insurance

Sohel Ali

Life Insurance

• A protection against the loss of income that would result if the insured passed away.

Why Life Insurance?

• Such insurance provides security to family members upon the loss of a loved one.

• It pays for funeral expenses

Beneficiary

• A beneficiary is someone who gains advantage/profits from something.

• Someone who is eligible to receive distributions from a trust.

Benefit of Life Insurance

• Life insurance is meant to benefit the survivors of the victim’s family.

Term Life Insurance

• Term life insurance is generally regarded as the most inexpensive of the lot.

• A life insurance policy pays a monetary benefit to the named beneficiary upon the death of the insured.

Pros/Cons of Term Life Insurance

Pros• Funeral expenses paid• Inexpensive

Cons• You have to die to win

Whole Life Insurance

• Whole life insurance is a type of life insurance that covers one for life.

• Requires one medical exam at the beginning of the policy.

• There are three types of whole life insurance: single premium, traditional, and interest-sensitive.

Universal Life Insurance

• Universal life insurance is a type of permanent life insurance policy that allows the policy holder to build cash value on a policy.

Pros/Cons of Permanent Life Insurance

Pros• It’s permanent• Cash value• When you cancel the

insurance you get a refund• No rising premium rates

Cons• Policy holder doesn’t have

control over investments• Money you invested in the

insurance will go to the stocks, bonds and mutual funds that the insurance company has sole rights to.

• Premiums of permanent life insurance are also more expensive than term life insurance

Difference

• There is no difference between term & whole life insurance when it comes to premiums staying the same while the policy is in force, or getting a guaranteed death benefit.

• There’s difference between term & whole life insurance and universal life in terms of cost.

Permanent Policies

Cash Value

• Some companies will pay interest and others will pay dividends.

Value Upon Cancelation

Factors That Determine Life Insurance

• The premium rate for a life insurance policy is based on two underlying concepts: mortality and interest. A third variable is the expense factor which is the amount the company adds to the cost of the policy to cover operating costs of selling insurance, investing the premiums, and paying claims.