Understanding Life Insurance Policies

The video discusses the decision to get life insurance, focusing on term life insurance to cover a mortgage and support a family. It compares term and whole life policies, highlighting the cost-effectiveness of term life for a 20-year period. The video calculates the probability of death that insurance companies use to determine premiums, explaining that they aim to make a profit by insuring many people with a low probability of death. The analysis provides insight into how insurance companies assess risk and set premiums.

Why is the speaker considering getting life insurance?

• To travel the world

• To buy a new car

• To ensure financial security for family

• To invest in stocks

What is the main reason the speaker chooses a term life policy?

• It covers the entire life

• It is cheaper and covers the next 20 years

• It offers better investment returns

• It requires no medical examination

How much does the speaker pay annually for the term life policy?

• $2,000

• $750

• $1,000

• $500

What is the total premium paid over the 20-year term life policy?

• $15,000

• $10,000

• $20,000

• $5,000

What is the insurance coverage amount for the speaker's term life policy?

• $500,000

• $1,500,000

• $750,000

• $1,000,000

How does the insurance company assess the risk of insuring the speaker?

• By reviewing employment status

• By evaluating driving history

• By calculating the probability of death

• By checking credit score

In the hypothetical scenario, how many similar individuals are considered?

• 200

• 100

• 50

• 150

What is the maximum probability of death for the insurance company to break even?

• 1 in 50

• 1 in 200

• 1 in 300

• 1 in 100

Why does the speaker feel better after considering the insurance company's risk assessment?

• The policy can be transferred

• The premiums are refundable

• The probability of death is low

• The policy covers all medical expenses

What is the speaker's main concern regarding the term life policy?

• The policy's investment potential

• The coverage after 20 years

• The annual premium cost

• The policy's tax benefits