Insurance Chapter 11
single-premium whole life insurance
EXTREME form of limited-payment life policy, you pay a one premium and you're done
cash-surrender value
amount payable to the owner of a cash-value life insurance policy if he or she decides the insurance is no longer wanted. calculated separately from the legal reserve.
renewable
can be renewed for additional periods without evidence of insurability. purpose is to protect the insurability of the insurance
whole life insurance
cash-value policy that provide lifetime protection (same as ordinary life insurance)
premature death
death of a family member with outstanding unfulfilled financial obligations, such as dependents to support, children to educate and a mortgage to pay off
variable life insurance
fixed-premium policy in which the death benefit and cash values vary according the the investment experience of a separate account maintained by the insurer
universal life insurance
flexible premium policy that provides protection under a contract that unbundles the protection and savings components
human life value
for purpose's of life insurance, the present value of the family's share of the deceased bread winner's future earnings
variable universal insurance
has component of flexible premiums but is also invested
ordinary life insurance
level-premium policy that provides cash values and lifetime protection to age 121 (if they live that long, the face amount of insurance would be paid at that time)
legal reserve
liability item on a life insurer's balance sheet representing the redundant or excessive premiums paid under the level-premium method during the early years. Assets must be accumulated to offset the legal reserve liability. Purpose is to provide lifetime protection
group life insurance
life insurance provided on a number of persons in a single master contract. physical examinations are not required and certificates of insurance are issued to members of the group as evidence of insurance
cash-value life insurance
life insurance with a savings component that builds cash values
term insurance
provides temporary protection for a specified number of years with no savings element. It is usually renewable and convertible
convertible
the term policy can be exchanged for a cash-value policy without evidence of insurability
limited payment policy
type of whole life, permanent and the insured has lifetime protection and has relatively high premiums that are paid only for a limited period
