Jumping Juvenile ***

MR. WATSON: Listen to this. You can have a jumping juvenile policy as well. What do you think this policy does at age 21?

ALL: It jumps.

MR. WATSON: It jumps. Here's how it works. If you buy a $10,000 policy on a child, at age 21 the face amount jumps by five times. So now it would be worth how much as a death benefit?

MAN: $50,000.

MR. WATSON: And the premium stays the same. It does not go up. But, they have been charging you more than a policy that does not jump. This is not a rider, it is an individual policy, usually whole life. Did y'all hear me?

ALL: Um-hmm.

Joint Life Policy ***

MR. WATSON: A joint life policy is one policy that covers two people. The ages are averaged to get the premium. It can be written in one of two ways.

1. it pays when the first person dies
2. it pays the death benefit only when the second person dies (called Joint & Survivor)

MR. WATSON: How old are you, Jean?

WOMAN: 40.

MR. WATSON: Let me see. A joint life policy covers more than one person. Let's say it covers me and Jean. They average the ages of the two insureds. So if I was 43 and she was 41, the average age would be 42. It could be written one of two ways.

1. Whoever dies first, it pays the survivor. So if you die, it pays me, and I go on my merry way, or vice versa. Or
2. it could be written with regard to the second insured to die; it won't pay when the first person dies. It only pays upon the death of the second person. This second way is used to pay estate taxes when the last one dies.

WOMAN: And that's called a joint whole life!

Multiple Protection Policy ***

MR. WATSON: A crazy type of policy called a Multiple Protection Policy . If you die within a certain time frame it pays double or triple the face amount, natural death or accidental. It is a whole life policy with a term rider attached. It is for folks who want a lot of whole life but can't afford the premiums. If, for example, a fellow needed $200,000 of coverage on his life and he wanted whole life but couldn't afford the premiums, he could buy $100,000 of whole life and add a term rider for another $100,000. Less premium.

MR. WATSON: Let's say you buy a policy for $100,000 with a 30 year level term rider for $100,000. If he dies during the first 30 years it pays $200,000. After that, the term drops off and he is left with $100,000 of the whole life. Wow!!! The rider can be any length you want.

Family Plan policy ***

MR. WATSON: What do you think a family plan covers?

ALL: Family.

MR. WATSON: It is sold in "units". Each $1000 being a "unit". Example: You have a $50,000 whole life policy on me, the husband. Here's my wife. We add a rider on her. It's a term insurance rider for, say, $50,000. Why would I add a rider? Why don't I just go buy another policy on her?

MAN: It would be more expensive.

MR. WATSON: Very good. This is cheaper. Adding a term insurance rider is cheaper than getting another policy.

ALL: Cool.

MR. WATSON: So it's a whole life policy on the main person, let's say $50,000 on the main breadwinner, a $50,000 term rider on the spouse, and a blanket $10,000 of term insurance on the kids. Just making up numbers, again, they're only for illustration purposes -- $10,000 rider on all the children. It's blanket coverage. No matter how many children you have in the family, it's $10,000 per child, all for one price, and it's a very low price. Children are not covered until after 14 days of birth. Then they are covered up to 21 years of age, and then they can convert their coverage to whole life or whatever. They're not covered until after 14 days. Children born later are automatically covered.

WOMAN: But do they have to be in college, to be still in school, to be covered up to 21?

MR. WATSON: No.