Insurance Flashcards
1
Q
Insurance; why have it?
A
- Personal and Business Risk
- A complement to investments and portfolio
2
Q
Personal Risk Exposures:
A
- 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
Q
Business Risk Exposures
A
- 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
Q
Life Insurance Selection Considerations
A
- Personal Profile- age, income, health, savings and investment
- Survivor needs- consequences of someone being gone
- Estate Liquidity
- Risk Tolerance
5
Q
Term life Insurance
A
only pays off if you actually die
6
Q
Whole Life Insurance
A
will be worth something even if you don’t die
7
Q
Variable Life Insurance
A
like whole life but it has an investment element, generally invested in some type of mutual fund
8
Q
Universal Life Insurance
A
more of an investment element to it.
9
Q
How much Insurance do I Need
A
- 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
Q
Needs for insurance change as time passes
A
financial obligations decrease and saving and investments goes up
Cost and Coverage
11
Q
A
