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Flashcards in Insurance Deck (11):
1


Insurance; why have it?


- Personal and Business Risk
- A complement to investments and portfolio

2


Personal Risk Exposures:


- Death before loan repayment; insurance would protect those who are stuck with your debt
- spouse outliving a pure life annuity, annuity insures you never run out of money
- guarantee a financial legacy
- Death before achieving investment goals
       - funding your spouses retirement
       - providing family needs
       - funding a gift

3


Business Risk Exposures


- death of a partner- funding a buy sell agreement-  all of possessions transfer to spouse, only way to get out of this deal is buy out, insurance policy would cover this buyout
- death of a key employee
- business owner estate liquidity
- Employee stock buy back plans- insurance pays for this (employee death benefits)

4


Life Insurance Selection Considerations


- Personal Profile- age, income, health, savings and investment
- Survivor needs- consequences of someone being gone
- Estate Liquidity
- Risk Tolerance

5


Term life Insurance


only pays off if you actually die

6


Whole Life Insurance


will be worth something even if you don't die

7


Variable Life Insurance


like whole life but it has an investment element, generally invested in some type of mutual fund

8

Universal Life Insurance


more of an investment element to it.

9

How much Insurance do I Need


- Rule of Thumb- 6 to 10 times of your income
- Based on Expense projections
       - funeral costs
       - debts
       - college costs
       - on going family expenses
- less savings and social security coverage

 

10


Needs for insurance change as time passes


financial obligations decrease and saving and investments goes up

Cost and Coverage
 

11