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Chapter 35
Life and Health

Section 35.1
Life Insurance
Read to Learn
  Identify ways to protect your family financially.
  Describe the different types of life insurance.
  Discuss the costs of life insurance.
The Main Idea
Life insurance is a way to protect a family’s
standard of living after the person who is
financially responsible for the family dies.
There are several types of life insurance.
Some of them also build savings.
Key Concepts
  Protecting Your Family

  Types of Life Insurance

  Costs of Life Insurance
Key Terms
          insurance that is paid to a person or
          people designated to receive the funds
          when the insured person dies

proceeds    the value of a live insurance policy
Key Terms

              a survivor who receives part or all of
              the proceeds

cash-value    insurance that provides both savings
insurance     and death benefits
Key Terms

term        insurance that covers a person for a
insurance   specified period of time
Protecting Your Family

People provide for their families with
investments and estate planning.

Life insurance and health insurance protect
Types of Life Insurance

The purpose of life
                          life insurance
insurance is to           insurance that is paid to a
protect the standard      person or people
of living of the          designated to receive the
                          funds when the insured
survivors.                person dies
Types of Life Insurance

The proceeds of life
insurance are paid to     the value of a life
the beneficiary.          insurance policy
                          a survivor who receives
                          part or all of the proceeds
Cash-Value Insurance

                       cash-value insurance
insurance is also      insurance that provides
called permanent       both savings and death
insurance.             benefits
Cash-Value Insurance

The cash value of cash-value insurance
increases throughout the life of the policy.

If a policyholder cancels the policy, he or she
can receive the amount of the cash value.
Whole Life Insurance

With whole life insurance, a premium that
stays the same is paid throughout the
policyholder’s lifetime.

The policy remains in force until the insured
dies, as long as the premiums are paid.
Whole Life Insurance

One of the factors in the cost of life insurance
is the number of years a person will pay
Figure 12.1 Length of Life
Universal Life Insurance

With universal life insurance, a policyholder
has more flexibility in premium payments and
benefits once the policy has built cash value.
Universal Life Insurance

Premium payments are applied to three

                Expenses of
 Insurance      the insurance
 protection     company for
                                for the
                the policy
Universal Life Insurance

A policyholder may be able to increase the
death benefits after passing a physical
Universal Life Insurance

Universal life insurance gives policyholders
flexibility in premium payments and death
benefits as their financial situation changes.
Variable Life Insurance

With variable life insurance, the cash-value
part of the premium is used for investments
rather than savings.

The cash value is variable.
Variable Life Insurance

Policyholders can buy a policy that has
features of both universal and variable life
                       Shop Around
Insurance consultants are paid a fee by the
customer to shop around for the best insurance
policy among many companies. An “insurance
broker” performs the same service, but the fee
is usually paid in the form of a commission from
the insurer that is selected rather than directly
from the customer.
Term Insurance

Term insurance pays
                          term insurance
benefits only if the      insurance that covers a
insured dies during       person for a specific
the term of the policy.   period of time
Term Insurance

Term insurance can be renewed, but usually
with a higher premium.

The major advantage of term insurance is its
low cost, compared to cash-value insurance.
Term Insurance

An employer or organization might provide
term insurance for employees or members.

When a member of the group leaves, the
coverage ends for that person.
Term Insurance

Workers or their companies usually pay less
for a group policy than for individual policies.

In a group policy, the individual usually pays a
small part of the cost for the coverage.
There have been a number of proposals to make
health insurance mandatory, either at the federal or
state level. The people making these proposals say
that when people without health insurance gamble
that that they will not get sick, society pays the bill.
Decision Making Some people do provide for loss
by a process called self-insurance. If people do not
self-insure enough, society might still have to pay.
Do you agree that people should be forced to buy
health insurance? Explain your answer.
Students might suggest that requiring people to
have health insurance places an unfair burden on
healthy people and could undermine the health
insurance system.
Costs of Life Insurance

The amount of the premium for a life insurance
policy depends on the type of the policy and
the amount of coverage.
Costs of Life Insurance

Factors affecting the cost of life insurance

  The type of policy         The policyholder’s
  The amount of              health
  coverage                   The policyholder’s
  The policyholder’s age     occupation
1. What are the different types of life insurance?

cash-value insurance, or permanent insurance,
whole life insurance, universal life insurance,
variable life insurance, and term insurance
2. How is term insurance different from whole
   life insurance?
With term insurance, a policyholder pays
premiums for a stated period of time. Term
insurance does not build cash value. At the end
of the term, the policy ends. It may be renewed.
Whole life insurance builds cash value, and
premiums are usually paid throughout the
insured’s lifetime.
3. What are three factors that affect the cost of
   life insurance?

the insured’s age, health, and occupation
End of
Chapter 35
Life and Health

Section 35.1
Life Insurance

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