Introduction to life insurance | Insurance | Financial literacy | Khan Academy

About this video

• Video Title: Introduction to life insurance | Insurance | Financial literacy | Khan Academy
• Channel: Khan Academy
• Speakers: Sal (implied narrator)
• Duration: 00:07:19

Overview

This video provides an introduction to life insurance, explaining its purpose and how it functions. The narrator shares a personal perspective on why life insurance becomes important, especially after having children, and discusses the difference between term life and whole life policies, along with factors influencing premiums like age and insurability. It also touches upon group versus individual plans.

Key takeaways

• Purpose of Life Insurance: Life insurance provides financial support to beneficiaries upon the insured's death, helping to cover expenses like lost income, mortgages, and education costs, thus maintaining the standard of living for dependents.
• Term Life vs. Whole Life: Term life insurance covers a specific period and is generally cheaper, while whole life insurance covers the entire life of the insured. The cost of term life is lower because the probability of death within a shorter term is lower for younger individuals.
• Premium Factors: Premiums for life insurance are influenced by age, health, and lifestyle. A riskier lifestyle or older age generally leads to higher premiums or denial of coverage due to insurability concerns.
• Individual vs. Group Plans: Group plans, often employer-provided, can be a benefit but may not be effective if employment changes. Individual plans are tied to the policyholder and provide continuous coverage regardless of employment status.
• Importance of Planning: While often overlooked, life insurance is a crucial financial tool to ensure loved ones are taken care of in the event of an unexpected death.