Types of Life Policies

Pure Death Protection

- if the insured dies during this term, the policy pays the death benefit to the beneficiary - if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term - there is no cash value or other living benefits

Characteristics of whole life policies

- level premiums based on issue age. - death benefit is guaranteed and also remains level for life. - cash value based on premiums paid and interest matched by the insurance company. If the policy is surrendered, you can typically obtain that cash value, but is taxed when collected. - Living benefits mean that you can collect that cash and or barrow against that cash.

2 death benefit options for universal life

1. Option A level death benefit - death benefit remains level while the cash value gradually increases. 2. Option B increasing death benefit - includes an annual increase in cash value so that the death benefit gradually increases each year.

3 basic types of term life insurance

1. level 2.increasing 3. decreasing

Three basic forms of whole life insurance

1. straight Life (continuous premium) 2. Limited payment 3. Single premium

Guaranteed Universal Life

A Guaranteed Universal Life policy is also referred to as "Universal Life with a No-Lapse Guarantee". This product provides the guarantee of term insurance for life. As long as the minimum required premiums are paid, the policy is guaranteed not to lapse.

cash value

A policies savings element or living benefit.

Decreasing Term

A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy. this is typically to insure mortgage payments continue, if breadwinner dies, because the loan decreases every year.

Securities

All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded.

Joint Life Policy

Covers two or more lives and provides for the payment of the proceeds at the death of the first among those insured, at which time the policy automatically terminates. also the premium payment is based on the average age between the insureds.

Joint Life Policy

Covers two or more lives and provides for the payment of the proceeds at the death of the last among those insured, at which time the policy automatically terminates.

Policies Linked to Indexes

Index-linked life insurance policies offer the potential for increasing death benefits that are linked to the Consumer Price Index. These policies provide benefits that automatically increase to keep pace with inflation and are designed to avoid being underinsured.

whole life insurance

Insurance that is kept in force for a person's entire life and pays a benefit upon the person's death, whenever that may be. accumulates cash value and is permanent.

Thee basic types of term coverage

Level Increasing Decreasing

Term Insurance

Life insurance coverage for a specified period of time, less expensive than whole life insurance, and there typically is an age limit for this. AKA pure death protection

licenses needed to sell variable insurance.

Life insurance producer license and securities license

Indeterminate Premium Whole Life

Lower premium rate initially (2-3 years) and adjusted (up or down) according to the insurers mortality, expense and investment projections. this policy has a maximum premium that it cannot surpass.

Payor Rider

Optional rider that costs extra and will pay the premiums of a Juvenile Policy if the owner dies or becomes disabled.

2 types of life insurance polices

Permanent and temporary protection

Juvenile Policies

Policies that provide life insurance protection on the lives of minors. Example: jumping juvenile.

Return of Premium

Policy refunds every penny of the premiums if one outlives the defined term (definitely pairs nicely with the increasing term policy)

Convertible Provision

Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability and is also based on attained age

Level Term Insurance

Term insurance where the face value of policy remains the same from the date the policy is issued until the date the policy expires.

Increasing Term

Term life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount.

endow

Top have the cash value of a whole life policy reach the contractual face amount.

Graded Premium Whole Life

Variation of a traditional whole life contract providing for lower than normal premium rates during the first few policy years, with premiums increasing gradually each year. After the preliminary period, premiums level off and remain constant.

Mortgage Redemption

When credit life insurance is used to protect against the unpaid balance of a mortgage, it is referred to as Mortgage Protection or Mortgage Redemption Insurance. In this case, the amount of protection decreases along with the balance of the mortgage.

deferred

Withheld or postponed until an event in the future.

Universal Life Insurance

a life insurance plan that is flexible on the amount of premiums to be paid. the insured actually can pay the minimum or pay extra, depending on their circumstance.

single premium

a one time lump sum payment, that is paid and then provides a level death benefit.

Renewable provision

allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability based on their attained age.

Interest sensitive whole life / current assumption

basically a whole life policy without a level premium, as it is based on risk, and is also more sensative to money market interest rates, meaning it could be a faster cash return.

Nonforfeiture Values

benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

Variable life insurance products

contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

Fixed life insurance products.

contracts that offer guaranteed minimum or fixed benefits.

Policy maturity

in life policies it is the the time when the face value is paid out.

family policy

insurance on all members of a family in a single policy.

straight life insurance

insurance on the life of the insured for a fixed amount at a definite premium that is paid each year in the same amount during the entire lifetime of the insured, this typically has the lowest premium

Variable Life Insurance

life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder. Policy holder bears the investment risk

Lapse

policy termination due to non payment of the premium.

Survivorship Universal Life (SUL)

second to die insurance basically, it is kind of like a joint life insurance.

modified whole life insurance

stepped premiums that allow young people to pay smaller premiums when they are making less, then after a specific time, the premiums step up to a higher level as the insured's income increases

Anually Renewable Term

technically it is a level term, meaning the face value does not change, however, the premium goes up annually due to someone's attained age.

face amount

the amount of benefit stated in the life insurance policy.

limited-payment life insurance

the insured has lifetime protection, and premiums are level, but they are paid only for a certain period which is typically less amount of time than straight life, and with higher premiums.

Attained Age

the insured's age at the time the policy is renewed or replaced

Level Premium

the premium that does not change, through the life of the policy.