12 insurance 1

re&ardin& insurance
insurance
+ Section ,: Insurance
+ A$ -i'e. B$ ealth. C$ isa"ilit). $ Auto. and $ ome !%ners/enters Insurance
+ o )ou need it 3ans%er 'or each section A56 o )ou have it6 o% much should )ou have6
+ 7hat t)pe is it6 Costs and covera&e6 iscounts/speci'ics6
+ Include a cop) o' )our C-U report 3i' availa"le5
+ Include a summar) sheet o' health insurance covera&e and 8829: -i'e Insurance eeds
+ Action Plan:

A$ Understand %hat our -eaders
have said a"out Insurance + Insurance is an important part o' "ecomin&
'inanciall) sel'reliant$ lder ;arvin <$ Ashton
said:
pro&ram$ It is most important to have su''icient
medical. automo"ile. and homeo%ner=s insurance
and an ade>uate li'e insurance pro&ram$ Costs
associated %ith illness. accident. and death ma) "e
so lar&e that uninsured 'amilies can "e 'inanciall)
"urdened 'or man) )ears 3;arvin <$ Ashton. ?@uide
to Famil) Finance. Liahona. Apr$ 2000. 425$

+ President $ ldon 8anner 'urther commented: + 7ith risin& medical costs. health insurance is the
onl) %a) most 'amilies can meet serious accident.
illness. or maternit) costs. particularl) those 'or
premature "irths$ -i'e insurance provides income
continuation %hen the provider prematurel) dies$
Every family should make provision for proper
health and life insurance 3$ ldon 8anner.
“Constanc) Amid Chan&e.” Ensign. ov$ 199.
D05$
+ 7hat is insurance6
+ Insurance is a le&al contract "et%een )ou and an
insurance 'irm %here") the 'irm a&rees 'or a
premium 3'ee5 to pa) )ou compensation 'or certain
(inds o' losses or events. i$e$. death. sic(ness.
compensation 'or accidents. loss o' a"ilit) to %or(.
le&al epenses. etc$
+ 7hat are the ma#or t)pes o' insurance6
+ -i'e. ealth. Auto. ome. isa"ilit). and -ia"ilit)
Insurance
Insurance 3continued5
+ 7hat is the purpose o' insurance6 + 8he purpose o' insurance is to trans'er the ris( o'
certain t)pes o' losses or events 'rom )oursel' to another institution$
+ B) trans'errin& ris(. it can help )ou and those )ou love achieve )our speci'ic &oals i' )ou die. &et sic( or "ecome una"le to %or(
+ Speci'ic &oals ma) include:
+ 8o ta(e care o' )our spouse and children
+ 8o raise children %ithout %or(in& outside the home

disa"ilit). or lia"ilit) insurance56
+ I' )ou die. &et sic(. or &et sued %ithout insurance:
+ *our spouse ma) have to %or(
+ *our children ma) not achieve important &oals
+ *ou ma) not "e a"le to ta(e care o' )our 'amil)
+ *ou ma) "e una"le to %or( and lose )our
earnin& capacit)

+ o% do )ou eliminate ris(6
+ Avoid it$ *ou can ta(e care o' )oursel'. avoid hi&h
ris( occupations. eat %ell. and eercise$
+ educe it$ *ou can reduce some ris(s ") addin&
'ire etin&uishers and "ur&lar alarms. addin&
air"a&s. or &ettin& re&ular medical chec(ups
+ Assume it$ *ou can retain the ris( throu&h sel'
insurance$ I' the costs are not too hi&h. )ou can
assume some ris(s )oursel'
purchasin& insurance$ *ou are pa)in& premiums to
trans'er the ris( to an insurance compan)$

+ o$ Some losses are not as critical as others$
Insure a&ainst the critical or serious losses
+ Can )ou classi') )our ris(s6
+ *es$ I li(e t%o thou&hts:
+ Fre>uenc) o' loss
+ Severit) o' loss
happens6
Fre>uenc) o' -oss
+ Balance the cost o' reducin& ris( %ith the severit)
o' the potential loss
)our 'inancial situation
+ Sel'insure a&ainst the smaller ris(s
+ Use insurance 'or %hat insurance does "estH
+ Be care'ul in miin& insurance and investin&
products
13
Cash value: %ith &uaranteed insura"ilit) option paid up till a&e E$ 8erm: Five)ear
&uaranteed rene%a"le term in 0.000 and 100.000 incrementsJ can add and drop as
necessar)$ Investment: Includes individual and emplo)er sponsored retirement plans

+ Positives:
+ Can "e tailored to meet individual needs and &oals
+ e&atives:
+ Ker) comple products
+ Cash value products are ver) epensive product %ith hi&h
commissions
+ Some cash value products are "ased on assumptions
3compan) can chan&e product a'ter )ou si&n the contract5
+ Ker) hard to monitor per'ormance o' cash value products
to compare a&ainst "enchmar(s

+ Insurance is an important part o' )our Personal
Financial Plan
+ ;an) ta(e a products approach to insurance
+ o%ever. insurance products %ill chan&e over
time. as ne% products are "ein& developed and
sold
+ 8he principles should not chan&e over time

a"out a speci'ic su"#ect6
+ 8he Prophet <oseph Smith said: ?I teach them
correct principles and the) &overn themselves$
3 Messages of the First Presidency, comp$ <ames $
Clar(. E vols$. Salt -a(e Cit): Boo(cra't. 19E.
:4$5
+ 7hat are the (e) principles o' insurance that can help
us ?&overn ourselves6
a"le to &overn. i$e$ ?mana&e our various insurance
products %isel) and cost e''icientl)

+ 1$ Lno% )oursel' and )our &oals
+ 2$ Lno% )our "ud&et and ho% much )ou can a''ord
+ $ Understand in detail the costs and "ene'its o'
each insurance product$ ead and understand the
prospectus and illustrations care'ull)H
+ 4$ Insure onl) a&ainst hi&hcost hi&hseverit) losses
+ $ 7or( onl) %ith hi&h>ualit) individuals and
institutions
chan&es as necessar)
Principles o' Insurance 3continued5
1$ Lno% )oursel' and )our &oals + Lno% %hat )ou %ant to attain out o' li'e
+ Understand that insurance is a tool to help )ou achieve )our &oalsGit is not a &oal in itsel'
+ @oals ma) include salar) replacement. liti&ation mana&ement. inheritance plannin&. etc$
+ Insurance is contin&ent 'inancin&
+ Lno% %hich products can help %ith %hich &oals
+ Understand each insurance product clearl)
+ eco&niMe that )our insurance needs %ill chan&e

2$ Lno% )our "ud&et and ho% much )ou can a''ord
+ Understand )oursel' and )our "ud&et$
+ o% much can )ou a''ord to spend on insurance
needs6
+ Be coste''ective in )our insurance plannin&
+ It ma(es no sense to "e&in an insurance pro&ram
that )ou cannot continue
+ 8a(e into account the potential 'or #o" loss and its
impact on )our "ud&et
+ Certain insurance products have much hi&her
premiums than others
o' each insurance product
insurance product$ ead the documents care'ull)
+ ead and understand the prospectus and
illustrations care'ull)H
epenses and are epensive to chan&e
+ Compare products across companies "e'ore )ou
purchase
+ 4$ Insure onl) a&ainst hi&hcost hi&hseverit)
losses
+ Insure a&ainst events that %ould have a ma#or
'inancial or economic impact on )ou and )our
'amil)
+ Balance )our need 'or insurance %ith the cost o'
insurance
separate
institutions
+ I' )ou 'eel an) pressure. 'ind another a&ent
+ evelop a lon&term relationship "ased on trust
+ ;a(e sure the) are licensed and (no% ho% a&ents
are paid
+ ;inimiMe the potential 'or con'licts o' interest
+ ;a(e sure the compan) is 'inanciall) sound
+ Find companies that have "een around and

+ *our insurance needs ma) chan&e over time
+ Use %isdom in )our chan&es
+ Add or reduce covera&e in the most cost
e''ective %a) possi"le
chan&es
value li'e insurance. have hi&h up'ront costs
and are epensive to start and cancel
+ Be a %ise ste%ard and an in'ormed consumer o'
insurance products
insurance6
re&ardin& insurance6
C$ o )ou understand the principles o'
insurance6
+ Bill is 2. married %ith one child. and does not
have an) li'e or health insurance$ e has a 'riend
that sells insurance$ is 'riend %ants to tal( to him
a"out his insurance needs$
%hether to choose this 'riend 'or his insurance
needs6
+ 8he "asis 'or these >uestions are 'rom Arthur <$
Leo%n. Personal Finance. Turning Money into Wealth
Student 7or("oo(. Prentice all. e% <erse). 200. p$
74$
+ 7or( %ith a&ents %ho %or( 'ulltime at their
"usiness$ 8his &ives &reater assurance that )our
a&ent is (no%led&ea"le in the products )ou need
and the products he or she represents$

insurance a&ent6
esta"lished 'or a num"er o' )ears$ 7hile a ne%
a&ent ma) "e competent. an eperienced a&ent %ill
more li(el) "e competent and have eperience$

represent6
o''er more competitive products than captive
a&ents. a&ents %ho onl) %or( 'or a sin&le insurance
compan)$
Under%riter56
advice or considerin& insurance other than term$
ealiMe that an insurance a&ent is onl) a"le to sell
thin&s the) are licensed to sell$

proposal that )ou prepare 'or me6
+ *ou should not consider an a&ent that doesn=t allo%
)ou to (eep the insurance proposal$ *ou should "e
a"le to ta(e the proposal home and revie% it on
)our time$
Ans%ers 3continued5
+ E$ 7ould )ou "e %illin& to in'orm me o' the commission )ou=ll receive on an) policies that )ou recommend6
+ *ou %ant to ma(e sure that the a&ent is %or(in& on
)our "ehal'$ B) (no%in& the a&ent=s commission
on various policies. )ou ma) "e a"le to avoid
policies that are more o' a "ene'it to the a&ent than
to )ou$ Be%are the a&enc) pro"lemH
+ I' the a&ent is not %illin& to share their
commission on each product %ith )ou. &o %ith
another a&ent %ho %ill$

recommend )ou6
+ *our a&ent should either suppl) )ou %ith names o'
satis'ied clients or share testimonial letters 'rom
others$
recommendations$

12 insurance 1

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