BU353 Lecture Notes - Lecture 8: Whole Life Insurance, Term Life Insurance
Document Summary
Life insurance: legal agreement that pays amount of ash upon death of insured (death benefit) Find out if need for protection is temporary or permanent. Temporary = short term debts like car payments or student loans. Face amount: stated amount of coverage purchased by policyholder. Term insurance: death benefit over fixed term (1, 5, 10 years) Pure death protection = pays if and only if insured dies within stated term of policy. Guaranteed renewable = policy can be renewed at predetermined premium at end of term without providing evidence of insurability. Endowment insurance: pays face amount of policy if insured dies as well as face amount of policy if insured survives policy term. Permanent insurance: provides death protection and savings or investment accumulation. Results in money being saved with insurance company. Overpayments used to offset premiums in later/more expensive years. Whole life insurance: contract length is policyholder"s whole life; key financial features set from beginning of policy.
