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Facts About Life Insurance Purpose What You Are Paying For

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Facts About Life Insurance Purpose What You Are Paying For Who Needs It? Using Life Insurance in Protecting the Farm Family How much insurance is needed? – PowerPoint PPT presentation

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Title: Facts About Life Insurance Purpose What You Are Paying For


1
Facts About Life Insurance
  • Purpose
  • What You Are Paying For
  • Who Needs It?

2
How Life Works
3
Using Life Insurance in Protecting the Farm Family
  • How much insurance is needed?
  • What kind of insurance do I buy?

4
Areas of Protection (DDIME)
  • Death Expenses
  • Debt cancellation (vs. transfer to heirs)
  • Income or lost services of the deceased
  • Mortgage
  • Education funds

5
What Kind of Life Insurance to Buy?
  • The protection feature of life insurance if more
    important than the investment feature.

6
Permanent Life Insurance
  • Permanent life insurance is a general term used
    to refer to various forms of whole life insurance
    policies that remain in effect to age 100 so long
    as the
  • premium is paid (include
  • a savings or investment
  • element called cash value).

7
Cash Value Negatives
Typically 20 of the premium paid goes towards
the cost of insurance and 80 goes to build a
cash value that operates under the following
rules
No Cash Value for the first 2-3 years
Negative return for 5-15 years. Average return is 1.3
Charged 6-8 interest to borrow your own money
Lose cash values when you die
8
Can You Afford Bundling
9
Term Life Insurance
  • Term life insurance is temporary life insurance
    provided for a specific period of time (also
    known at pure life insurance protection).

10
Insurance to Cover Farm Debt Only
  • Decreasing Term Insurance
  • Mortgage Insurance
  • Credit Insurance

11
Business Transfer Planning
  • Buy/Sell Agreements
  • Key-Person Insurance

12
Liquidation Versus Retention of Capital
  • Selling assets is a method of raising capital.
  • Retention is the retaining of assets.

13
Looking at My Current Policy
  • Type of insurance
  • Amount of Insurance
  • Premium Is the premium level?
  • Length of Policy
  • Beneficiaries
  • Convertibility
  • Renewable

14
How to Pick a Life Insurance Agent
  • Does the agent take the time to get to know you
    and your needs?
  • Does the agent help you understand your options?
  • Does the agent present a clear analysis.
  • Do you feel pressured?
  • Do they have a license to sell insurance in your
    state?
  • A DONT How Much Do You Have to Spend

15
What to Consider When Replacing a Policy
  • Family needs change
  • Policy outdated
  • Your investment needs better met elsewhere
  • Several separate policies

16
Be Cautious About Replacement When
  • You are in bad health, uninsurable, or
    considerably older.
  • You have a good, competitive policy and cant get
    a better value for your money.
  • Never cancel your existing policy until the new
    one has been issued and delivered to you.
  • Your relationship with your agent is more
    important than having your family covered.

17
The bottom line.
  • When considering policy replacement, examine your
    options carefully! Most companies offer
    proposals that show the costs and provisions of
    the policy. As for these illustrations as you
    shop for the best value. Your goal is financial
    security avoid spending more than necessary.
    Always consider what works best for you and your
    family its your decision!

18
Summary Tips for Making a Wise Insurance
Purchase
  • Buy Adequate Coverage
  • Buy Only One Policy Per Family

Example 6 policies x 75 administrative fee
450 1 policy with riders - 75
375 With the 375 difference (450 - 75
375), you could buy as much as 325,000 term
life insurance at age 30 and pay a full years
premium.
19
Summary Tips for Making a Wise Insurance
Purchase
  • Understand the purpose of life insurance on
    children
  • Avoid expensive gimmicks
  • Avoid insurance policies disguised as something
    else
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