Following Social Security as a foundation to managing the life cycle risks of old age, sickness, accidents, and death, we begin our expedition into the products that help in solving these risks. In this module we delve into the life insurance products and the life insurance industry as one separate from the property/casualty insurance industry.
The pricing of life insurance and annuities are based on mortality tables and life expectancy tables.
In this module we will learn about the different life insurance products available-term life, whole life, universal life, variable life, and universal variable life products.
While mortality rates keep improving, extreme health catastrophes can reverse the trend for brief periods. At various points in human history, mortality rates worsened as extreme health catastrophes occurred.
For example, the mortality rate changed dramatically in 1918 when millions of people died from the flu pandemic. The potential for an avian flu pandemic in 2006 led to estimated life insurance claims of up to $133 billion under the most extreme scenario.
The young and the elderly are those affected most by the flu. Because these age cohorts usually have less life insurance coverage, the general mortality impact may be even greater than the life claims estimates. 
Life insurance can be thought of as a contract providing a hedge against an untimely death.
When purchasing life insurance, the policyowner buys a contract for the future delivery of dollars. This also provides liquidity. The death, whenever it occurs, will create , such as funeral costs and debt payment, and estate taxes if the estate is large enough, that must be paid immediately.
Most people, no matter how wealthy, will not have this much cash on hand. Life insurance provides the necessary liquidity because its payment is triggered by death. Smart decisions about life insurance require understanding both the nature of life insurance and the different types of products available. In this chapter we cover the most widely used products.
This module includes the following topics:
1. How life insurance works
2. Life insurance products: term insurance, universal life, variable life, variable universal life, and current assumption whole life
3. Taxation, major policy provisions, riders, and adjusting life insurance for inflation
4. Group life insurance
END of UNIT
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