Personal Finance Chapter 13

§Maintain financial support for dependents §Leave money for heirs

§Provide coverage in exchange for premiums

Life insurance that is provided over a specified time period and does not build a cash value

a form of term insurance in which the benefits that will be paid to the beneficiary are reduced over time and the premium remains constant

Life insurance that pays off a mortgage in the event of the policyholder’s death

Term insurance with generally lower than typical premiums that is available to people within a defined group- best deal

Life insurance that continues to provide insurance as long as premiums are paid; not only provides benefits to the beneficiary but also has a cash value

Used for life insurance and savingsPaid on a monthly, quarterly, or annual basisConstant for the duration of the policy

Allows you to pay premiums over a specified period but remain insured for life

•Whole life has higher premiums •Whole life accumulates savings •Whole life premiums remain constant

Life insurance that provides insurance over a specified term and accumulates savings for the policy holder over this time

life insurance that provides insurance over a specified term and allows policyholders to invest residual funds, after the term portion is paid, in various types of investments

A method that determines how much life insurance is needed based on the policyholder’s annual income

A method that determines how much life insurance is needed based on the household’s future expected expenses §Budget method doesn’t consider an unanticipated major illness or disability Annual living expenses §Special future expenses §Debt §Job marketability of spouse §Value of existing savings

Benefits that allow the policyholder to receive a portion of death benefits prior to death