Primerica Chapter 2 Terms
3 basic types of term coverage
-Level -Increasing -Decreasing
Suitability
A requirement to determine if an insurance product is appropriate for a costumer
Qualified Plan
A retirement plan that meets IRS guidelines for receiving favorable tax treatment
Joint Life Policy
A single policy that is designed to insure two or more lives -The premium is based on a joint average age that is between the ages of the insured's -The death benefit is paid upon the first death only
Survivorship life
Also known as "second-to-die" or "last survivor" policy -insures two or more lives for premium that is based on a joint age -pays on last death rather than upon the first death
Universal life
Also known by "flexible premium adjustable life"
Nonforfeiture Values
Benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
Variable Life Insurance
Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
Fixed Life Insurance
Contracts that offer guaranteed minimum or fixed benefits
Liquidation of an estate
Converting a person's net worth into a cash flow
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 -The policy is completely paid up after one premium and generates immediate cash
Securities
Financial instruments that may trade for value (ex: stocks, bonds, options)
Policy Maturity
In life policies, the time when the face value is paid off
Option B (Increasing Death Benefit option)
Includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases -The total death benefit will always be equal to the face amount of the policy plus the current amount of cash value
Target premium
Recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime
Term Life
Temporary protection (pure life insurance)
Minimum premium
The amount needed to keep the policy in force for the current year
Face Amount
The amount of benefit stated in the life insurance policy
Endow
The cash value of a whole life policy has reached the contractual face amount
Option A (Level Death Benefit option)
The death benefit remains level while the cash value gradually increases, thereby lowering the pure insurance with the insurer in the later years
Attained Age
The insured's age at the time of the policy is issued or renewed
Cash Value
The policy's savings element or living benefit
Level premium
The premium that does not change throughout the life of a policy
Deferred
Withheld or postponed until a specified time or event in the future