Insurance test: Chapter 3

whole life insurance (most common type of permanent life insurance)

Provides lifetime protection and includes a saving element.

Equity Index whole life

main feature is that the cash value is dependent upon the performance of the equity index, (such as the S&P 500), although there is still a minimum interest rate. premium is fixed and the death benefit is guaranteed.

Decreasing term

policy features a level premium and a death benefit that decreases each year. usually purchased to insure the payment of a mortgage or other debts if the insured dies prematurely.

survivorship life insurance (second to die)

premium is based on joint age. pays on the last death rather than upon the first death.

Graded premium whole life

premium starts out low and then level off at a point in the future. then increases each year then levels out

Pure Death Protection

provided by term insurance if the insured dies during the term the policy pays the death benefits if cancelled prior to death nothing is paid no cash value or other living benefits

Characteristics of group plan

purpose of group size of group turnover of group financial strength of group

Permanent life insurance

refers to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured.

Joint life insurance

single policy that is designed to insure two or more lives. Can be term or permanent. premium sum is less than normal two people premium would add up too - based on joint average age death benefit is paid upon the fist death only. common among husband and wife

Cred life insurance

special type of coverage writtin to insure the life of the debtor and pays off the balance of a loan in the event of the death of a debtor. *decreasing term insurance* creditor is the owner and beneficiary of the policy

Term Insurance (pure life insurance)

temporary protection because it only provides coverage for a specific period of time. greatest amount of coverage for the lowest premium. three types: level, increasing, and decreasing

Group life insurance

Issued to sponsorship org and covers lives of more than one person of group. based on average age and ratio of men to woman.

Annually renewable term (ART)

Purest form of term insurance. Death benefit remains constant. Premium increases annually according to the attained age (as death probability increases)

straight life (continuous premium)

basic whole life policy. Policyowner pays the premium from the time the policy is issued until the insured's death.

Limited payment (whole life)

designed so that the premiums for coverage will be completely paid up before the age 100.

single premium whole life (SPWL)

designed to provide a level death benefit to the insured's age 100 for a one-time, lump-sum payment.

Adjustable life

developed in an effort to provide the policyowners with the best of both worlds (term and permanent). can pick either, then the policyowner can change it overtime

Interest-sensitive whole life (or current assumption life)

fixed-premium whole life policy that provides a guaranteed death benefit to age 100.

Level Premium Term

level death benefit and a level premium during the policy term.

whole life insurance (key characteristics)

level premium death benefit cash value living benefits

Variable Life insurance

level, fixed premium, investment based product, guaranteed death benefit. Cash value is not guaranteed, and fluctuates with the performance of the portfolio.

Juvenile life insurance

life insurance written on the life of a minor.

Conversion (group)

the employee can convert to an individual plan has 31 days after terminating from the group to exercise the conversion option.

level term

the most common type of temporary protection. The word (answer) refers to the death benefit that does not change throughout the life of the policy.

Modified life

type of whole life policy that charges a low premium in the first few years (3-5) then a higher level premium for the remainder of the insurers life.