After studying this chapter you will be able to: Explain the types of life insurance; calculate life insurance premiums; explain and calculate cash value and other nonforfeiture options; explain and calculate premiums for fire insurance of buildings and their contents; calculate refunds when the insured and the insurance company cancel fire insurance; explain and calculate insurance loss when coinsurance is not met;. | LIFE, FIRE, AND AUTO INSURANCE Chapter Twenty Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1 Explain the types of life insurance; calculate life insurance premiums. Explain and calculate cash value and other nonforfeiture options. LU 20-1: Life Insurance Learning unit objectives LU 20-2: Fire Insurance Explain and calculate premiums for fire insurance of buildings and their contents. Calculate refunds when the insured and the insurance company cancel fire insurance. Explain and calculate insurance loss when coinsurance is not met. Explain and calculate the cost of auto insurance. LU 20-3: Fire Insurance 2 20- Face amount – The amount received (proceeds) upon the death of the insured Insured – The policyholder receiving coverage Premium – Periodic payments you make for the cost of the insurance (determined by actuaries) Life Insurance Beneficiary – The person receiving the insurance proceeds at the death of the insured 3 Step 2. Divide the | LIFE, FIRE, AND AUTO INSURANCE Chapter Twenty Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1 Explain the types of life insurance; calculate life insurance premiums. Explain and calculate cash value and other nonforfeiture options. LU 20-1: Life Insurance Learning unit objectives LU 20-2: Fire Insurance Explain and calculate premiums for fire insurance of buildings and their contents. Calculate refunds when the insured and the insurance company cancel fire insurance. Explain and calculate insurance loss when coinsurance is not met. Explain and calculate the cost of auto insurance. LU 20-3: Fire Insurance 2 20- Face amount – The amount received (proceeds) upon the death of the insured Insured – The policyholder receiving coverage Premium – Periodic payments you make for the cost of the insurance (determined by actuaries) Life Insurance Beneficiary – The person receiving the insurance proceeds at the death of the insured 3 Step 2. Divide the amount of coverage by $1,000, and multiply the answer by the premium cost per $1,000. Step 1. Look up the age of the insured and the type of insurance in Table 20-1 (for females subtract 3 years). This gives the premium cost per $1,000. Calculating Annual Life Insurance Premiums 4 Life Insurance Rates (Table ) 5 Straight Life (Ordinary Life) -- Provides permanent protection. The insured pays the same premium each year or until death. Has a built in cash savings feature. $200 x $ = $2,908 Term Insurance -- Pays face amount only if you die within the period of the insurance. The cheapest coverage. $200 x $ = $704 Calculating Insurance Premiums Bob Brady, age 40, wants to purchase a 5 year $200,000 insurance policy. Determine her annual premium. $200,000 (Coverage) 1,000 Step 2 Step 2 = 200 Step 1 6 Universal Life - A whole life insurance plan with flexible premium schedules and death benefits. Greater risk to the holder because premiums are subject to interest rate .
