INSURANCE PLANNING BASICS, PART I

This chapter examines two of the most common types of insurance that can have a huge impact on personal financial planning: life insurance and health insurance. Life insurance is important to personal financial planning because the economic loss that can occur as a result of premature death is often nothing short of catastrophic to a family. The chapter explores the types of insurance. Term life insurance is analogous to renting property. Permanent life insurance is an alternative to term life insurance. Whole life insurance provides protection against the economic loss of death for the lifetime (whole life) of the insured. An insurance rider is an additional contract provision to an insurance policy. Hospital, surgical, and physician's expense insurance plans are the most basic form of health insurance. Managed care plans are health insurance plans that use contracts with healthcare providers and medical facilities to provide care for plan members at reduced costs.