1. Chapter 9 Managing Life, Health, and Disability Risks

2. 9-2 Risks Associated with Premature Death  Inadequate financial resources Income for readjustment period Financial support for dependents Earmarking funds for specific goals  Estate preservation Expenses Taxes Debt retirement

3. 9-3 Measuring Needs  Needs related to premature death Human life value approach Financial needs approach Capital retention approach  Disability income needs  Long-term care needs

4. 9-4 Term Life Insurance  Features  Types of polices  Term life policy riders  Advantages  Limitations

5. 9-5 Whole Life Insurance  Characteristics  Types of whole life policies  Dividend options  Nonforfeiture options  Whole life insurance policy riders  Advantages and limitations

6. 9-6 Universal Life Insurance  Overview  Death benefit options Option A Option B  Premium payments

7. Structure of a Universal Life Policy

8. 9-8 Variable Universal Life  Flexible premiums and death benefits  Self-directed investment accounts  Policy structure  Registered security Agents/brokers who sell VUL must have license for insurance and securities

9. 9-9 Modified Endowment Contracts (MECs)  7-pay test  Material change  LIFO treatment  10% penalty (< age 59½)

10. 9-10 Universal Life and VUL: Other Features  Riders and optional benefits  Advantages  Limitations  Equity indexed universal life (EIUL)

11. 9-11 Group Life Insurance  Group term  Group whole life insurance  Group universal life  Group variable life insurance

12. 9-12 Life Insurance Policy Selection and Replacement  Policy selection  Policy illustrations  Policy replacement Belth price of protection model

13. Policy Replacement  Belth price of protection model:

14. 9-14 Life Insurance Policy Provisions  Grace period  Incontestability  Entire contract clause  Misstatement of age or gender  Assignment Absolute Collateral  Suicide

15. 9-15 Life Insurance Policy Provisions (cont.)  Reinstatement  Policy loans and automatic premium loan  Beneficiary designations  Aviation and war exclusions  Survivorship clause  Simultaneous death

16. 9-16 Life Insurance Settlement Options  Interest only  Fixed amount  Fixed period  Life income  Life income with period certain  Life income with refund  Joint and last survivor income

17. 9-17 Annuity Contracts  Types of annuities Immediate/deferred Flexible premium/single premium Fixed/variable/equity-indexed  Timing of annuity payments Straight life Life with period certain Installment refund/cash refund Joint and survivor

18. 9-18 Taxation of Life Insurance and Annuities  Life insurance Lifetime benefits Death benefits  Viatical agreements Terminal illness Chronic illness  Annuities

19. 9-19 Individual Health Insurance  Major medical insurance Characteristics Limitations  Medical expense insurance Basic medical insurance coverage Limitations

20. 9-20 Health Savings Accounts and Long-Term Care Insurance  Health savings accounts (HSAs) Eligibility Contributions and distributions  Long-term care insurance Levels of care Benefits Tax-qualified long-term care insurance

21. 9-21 Disability Income Insurance  Characteristics  Taxation of benefits  Integration of benefits  Termination of benefits  Residual benefits

22. 9-22 Health and Disability Insurance Policy Provisions  Preexisting conditions  Grace period  Reinstatement  Incontestability clause  Rights of renewability

23. 9-23 Group Health and Disability Insurance  Eligibility  Characteristics  Health insurance and managed care  COBRA  Taxation of group health benefits  Portability (HIPAA)

24. 9-24 Business Uses of Life Insurance and Other Employee Benefits  Buy-sell agreements  Nonqualified plans  Key person life insurance  Disability overhead expense insurance  Other employee benefits