Lecture: Life Insurance - Module 3, Segment 2

Overview

• Topics Covered: Term Life Insurance
• Future Segments: Permanent Insurance (Whole Life, UL)

Term Life Insurance

Definition

• Term Life Insurance: Coverage for a specific time period

Term Selection

• Choose a specific number of years (e.g., 2, 5, 10 years)
• Or until a certain age (e.g., 60 or 65 years)
• Premium is based on the term selected

Premium Calculation

• Cheapest type of insurance: Especially if the insured is younger
• Factors affecting premium:
  • Age of the insured
  • Length of the term
• Example: Lower premium for a younger person choosing a 10-year term vs. a 40-year term

General Rules Applying to All Policies

Attained Age

• Definition: Age used by the insurance company to set premiums
• Age Brackets: Insurance companies have different age brackets that can affect cost
  • Example: 20-29 years, 30-39 years
• Calculation Methods:
  • Last Birthday
  • Next Birthday
  • Nearest Birthday

Example

• Tom bought a policy on August 12, 2019; Birthday: November 1, 1985
  • Last Birthday: 33 years old
  • Next Birthday: 34 years old
  • Nearest Birthday: 34 years old

Two-Year Contestability Period

• Applies to all policies
• Includes a two-year suicide provision (no benefit if suicide occurs in the first two years)

Continuing with Term Life Insurance