1. Explain how term life insurance works.
- A person with term life insurance is covered for a certain duration of time, this amount of time expiring at a certain outlined date. It is at this expiration date that the policy owner must decide whether to renew life insurance for the recipient or to let the coverage end, this decision often taking into account whether the person in question is of a high liability or not. For example, if the recipient has multiple health complications and thus needs medical treatment often, he or she is of a greater ‘liability’ and in this way requires more coverage and money on the part of the one providing coverage. If this is the case, this person is less likely to get reasonable coverage and may not receive coverage at all due to his or her high need for maintenance. To receive term life insurance, your health state must be analyzed and you must be allotted a fixed rate by which to pay on a monthly or annual basis.
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| Like the characters in the Walking Dead TV series, term life insurance issues run on expiration dates |
2. Explain how whole life insurance works.
- Whole life insurance, in contrast with term life insurance that covers in intervals, provides coverage to a recipient for the duration of his or her life. Upon death, a payout is made to the beneficiaries of the the holder of the contract. In addition to providing coverage, this breed of insurance also accumulates a monetary value over time that increases as the supposed worth of the person it is entitled to increases, this savings aspect also being funneled to those in support of the recipient at the time of his or her death.
3. Explain how variable life insurance works.
- Variable life insurance is a type of permanent life insurance, meaning it applies to a person for the whole of his or her life. This type is different in that it has a high cash potential as some of the policy’s funds are allocated to a separate account used for investment purposes, this add-on giving the recipient the opportunity to make money while not having to put work into this line of battle. This lucrative investing scheme is made even more so in that the earnings the recipient makes through such dealings is not taxed, but is rather tax-deferred and thus evades the high taxes of adulthood. In this way, the money made through Variable life insurance is either enjoyed by the retired or the beneficiaries to the retired at the time od their death.
4. What are the advantages and disadvantages of variable life insurance?
→ Advantages
- tax advantages
- opportunity to invest and make money
- flexible premiums
- cheap Life Insurance Quotes
→ Disadvantages
- risky investments that have the possibility of failure
5. Compare term life and whole life insurance. What are their advantages and disadvantages?
→ Term life insurance
- disadvantages
- no cash value
- temporary protection
- advantages
- adjustable coverage
- rewards for being healthy - a reasonable rate applied
- low premium rates
→ Whole life insurance
- disadvantages
- cost
- premium rates can be times as expensive as is considered normal
- chance for investments allows to not grow at all
- locked monthly premium amount that grows over time
- advantages
- permanent schedule
In the same way memory of food sticks to the mind, permanent life insurance sticks with one's life till death do they part, supplying the persons family with money once death is reached
6. If you die, the insurance company has to pay your beneficiaries a lot of money. How do life insurance companies make money?
- Life insurance companies make their money by charging high rates to those feeble enough and close enough to death, and also incur a large enough profit from life insurance policies for those whole insurance expires before their time of death, this occurrence resulting in no reimbursement being made to the recipient’s beneficiaries.
7. Which life insurance is right for you and your family? Which one will you choose and why? For the purpose of this class, use either term life or whole life.
- I believe term life insurance will do just fine for me, as I will be better able to pay increasing rates over time with the help of a steady job that will only promote me to more lucrative responsibilities. Also, if I stay healthy as I get older, I will only be entitled to more benefits that will keep premium rates for my possible family and I. In this way, my coverage should be refreshed prompt every time an expiration date nears, and so my family will always have the protection of being reimbursed upon my time of death. The stability of term life insurance will only help to keep my life out of debt and allow me to focus on accumulating other storages of cash potential as options for benefiting my home life.
8. Deduct the monthly expense from your budget. Update your budget with the cost of life insurance. Your teacher has the fees for you.
9. Calculate the amount of money you will spend after twenty years.
- After 20 years, I will have spent $97,269.60 on term life insurance, with coverage being based on a rate of 7.12% (respective towards 20 year issue duration).
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| This handy green leaflet helped me to find out which insurance premium rate I would use to calculate how much I would have to pay monthly for life term life insurance |
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