Chapter 13c - • Grace period • Living benefits benefits...

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Determining the Amount of Life Insurance Needed Budget method: a method that determines how much life insurance is needed based on the household’s future expected expenses Annual living expenses Special future expenses Debt Job marketability of spouse Value of existing savings Determining the Amount of Life Insurance Needed (cont'd) Some insurance companies’ Web sites allow you to determine your life insurance needs Limitations in estimating need Budget method doesn’t consider an unanticipated major illness or disability Family income may not rise Weak economic conditions impact income Inflation could cause underestimate of needs Debt level could increase Contents of a Life Insurance Policy Beneficiary: person named to receive benefits of an insurance policy
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Unformatted text preview: • Grace period • Living benefits: benefits that allow the policyholder to receive a portion of death benefits prior to death • Contents of a Life Insurance Policy (cont'd) • Nonforfeiture clause: allows you to receive the savings you accumulated if you terminate your whole life policy • Loans • Incontestability clause • Renewability option: allows you to renew your policy for another term once an existing policy expires • Contents of a Life Insurance Policy (cont'd) • Conversion option: allows you to convert your term insurance policy into a whole life policy that will be in effect the rest of your life • Financial Planning Online: How Much Life Insurance Do You Need?...
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