Types of Life Insurance Policies

Pure death protection

1) If the insured dies during the term, the policy pays the death benefits to the beneficiary. 2) If the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term. 3) There is no cash value or other living benefits.

3 levels of term insurance

1) Level 2) Increasing 3) Decreasing.

Whole Life key Characteristics

1) Level Premium - same premium 2)Death benefits - Guaranteed after death 3) Cash Value - Earned interest and accumulates cash 4)Living Benefits - borrow against the cash value

A Universal Life Insurance policy is best described as:

A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance.

Which of the following is NOT a way to determine the interest rate in a Universal Life Policy?

Estimate market conditions for the life of the policy.

Increasing Term

Features level premiums and a death benefits that increase each year over the duration of the policy term.

All other factors being equal, which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest.

Single Premium whole life

Is 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.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

Paul is the policyowner of a life insurance policy which will increase significantly in face amount (death benefit) when the insured reaches an age specified in the policy. This policy is referred to as a

Jumping juvenile policy.

Which of the following is an example of a limited pay life policy?

Life Paid-up at age 65

Which type of life insurance policy generates immediate cash value?

Single Premium

Which of the following would help prevent a universal life policy from lapsing?

Target premium

In an Adjustable Life Policy all of the following can be changed by the policy owner EXCEPT?

The type of investment

Which Universal Life option has a gradually increasing cash value and a level death benefits?

Under option A, the death benefits remains level while the cash value gradually increases. The death benefits will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

Minimum premium

amount needed to keep policy in force for the current year.

Juvenile life insurance

as the name implies, any life insurance written on the life of a minor. A common juvenile policy is known as the jumping juvenile policy because the face amount increases at the predetermined age, often age 21. The face amount jumps, but the premium remains level.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so they could qualify for group life insurance. After they applied for group insurance, they were rejected. Why?

he purpose of the group was to purchase life insurance.

Annually renewable term policies provide a level death benefit for a premium that?

increases annually

Permanent life insurance

is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid.

Target Premium

is a 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.

Credit insurance

is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. Credit life is usslly written as decreasing term insurance, and it may be written as an individual policy or as a group plan.

Universal Life

is also known by the generic name flexible premium adjustable life. That implies that the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again.

Survivorship Life ( Second-to-die)

is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death

Term Insurance

is temporary protection because it only provides coverage for a specific period of time. It is known as pure life insurance. Term policies provide for the greatest amount of coverage for the lowest premium.

Indexed whole life

is that the cash value is dependent upon the performance of the equity index.

Straight Life

is the basic whole life policy. The policyowner pays the premium from the time the policy is issued until the insured death or age 100. It has the lowest annual premium.

Level term insurance

is the most common type of temporary protection purchased. The death benefits do not change throughout the policy.

Return of premium

life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of premiums paid. The return of premium is paid if the death occurs within a specified period of time or if the insured outlives the policy term.

In a survivorship life policy, when does the insurer pay the death benefit?

pays on the last death rather than upon the first death.

Whole Life Insurance

provides lifetime protection, and includes a saving element (or cash value).

Adjustable Life

was developed in an effort to provide the policyowner with the best of both worlds. An adjustable life policy can assume the form of either term or permanent insurance. The insured typically determines how much coverage is needed and the affordable amount of premium.