chapter 2 - types of insurance policies

What kind of policy allows withdrawals or partial surrenders?

Universal Life

Minimum Premium

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

Decreasing Term

This type of life insurance policy is unique b/c the death benefits decrease on a scheduled basis. Most commonly used to cover a mortgage or other type of loan.

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

Upon the last death

Option B Level

annual increases - at any point the total death benefit will be equal to the face amount of policy plus the current amount of cash value.

Level Premium

the premium that does not change throughout the life of a policy

Annuitant

The person that buys an annuity; may or may not be an annuity's policyowner.

Permanent

lasting or expected to last for a long time

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.

When would a whole life insurance policy mature?

When the insured dies or turns age 100, whichever is sooner

Living Beneifts

the policyowner can borrow against cash value while the policy is surrendered.

The least expensive first-year premium is found in which of the following policies

annually renewable term

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

Fixed Annuity

An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments.

Indexed Life

Face amount increases based on the performance of an equity index, such as the S&P 500 with a guaranteed minimum interest rate and fixed premiums

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

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

Which of the following is not true about a joint and survivor annuity benefit option

Payments stop after the first death among the annuitants.

Death Benefit

The amount payable upon the death of the person whose life is insured.

Variable Universal Life

a product that blends many features of whole life, universal life, and variable life. Key features are premium flexibility, cash value investment control, and death benefit flexibility.

Universal Life Insurance

a whole life policy that combines term insurance and investment elements

Straight life

is the basic whole life policy

what are the three basic types of terms life insurance?

level , increasing, and decreasing

Variable Life Insurance

life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder

Straight life policy

premium is based on your age at inception and remains fixed over the policy life. before age 100

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

cash value

the amount received after giving up a life insurance policy

All of the following are true regarding a decreasing term policy except

the payable premium amount steadily declines throughout the duration of the contract

Annually Renewable Term

the purest form of term insurance. The death benefit remains level, and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as the probability of death increases.

Variable Whole Life Insurance is based on what type of premium?

Level fixed

Adjustable Life

Life insurance which permits changes in the face amount, premium amount, period of protection, and the duration of the premium payment period.

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first.

Level Term Insurance

is the most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy.