Life Insurance Policies

Endowment

"your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of cash"

Universal Life Option A

(Level Death Benefit) the death benefit remains level while the cash value gradually increases. must maintain a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS.

Annually Renewable Term

Purest form of term insurance, provide a level death benefit for a premium that increases annually, death benefits remain level and as with any term policy there are no cash values, the least expensive first year premium

Modified Life Policies

charge lower premiums during the first policy years, usually the first 3 to 5, and then higher level premiums for the remainder of the insured's life. The higher subsequent premiums are typically higher than straight life premiums would be for the same age and amount of coverage

Group Insurance termination

coverage continues for 31 days under the conversion privilege

Single Premium Whole Life (SPWL)

generates immediate cash value. endows for the face amount of the policy if the insured lives until the age of 100.

Universal Life Insurance two types of interest rates

guaranteed and current

Juvenile Life Insurance

is classifies insures the life of a minor

Convertible Term Insurance

is convertible without proof on insurability up to the full term death benefit. However, upon conversion, the premium for the permanent policy will be based on the insured's attained age. Upon conversion, the death benefit of the permanent policy will be reduced by 50%. Policy that can be changed from one that does not accumulate cash value to one that does

Absolute Assignment

is the transfer or all ownership rights in a policy

Limited-Pay Life Policy

life paid up at age 65, The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity

Limited Pay Whole Life

premium payments will cease at age 65, but coverage will continue to death or age 100. "Your client wants both protection and savings from insurance, and is willing to pay premiums until retirement age"

Fixed Period Settlement Option

purpose is to provide a guaranteed income for a certain period of time

Single Premium Whole Life

requires the entire premium to be paid in one lump sum at the policy's inception

Performance of the policy portfolio

the cash value of a variable life policy is not guaranteed and fluctuates with the performance of the portfolio in which premiums have been invested by the insurer

Adjustable Life Policy

the death benefit can be increased by providing evidence of insurability, allow for increases or decreases in the face amount or premium

Per Capita

"by the head"

"Level" in level term insurance

"face amount", maintain a level death benefit (or face amount) throughout the term of the policy

Survivorship Life Policy

"second-to-die", pays on the last death rather than upon the first death

Largest annual premium to smallest annual premium

20 year endowment, 20 pay life, 20 year level term, 20 year decreasing term

Types of Assignments

absolute and collateral

Reduction of Premium

allows the policy holder to apply policy dividends toward the next year's premium

Straight Life Policy

charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit. It has the lowest annual premium of the three types of whole life policies, the face value of the policy is paid to the insured at age 100, it usually develops cash value by the end of the third policy year

Modified Life Policy

charges a lower premium for the first few policy years (3 to 5) and then a higher level premium for the remainder of the life of the policy. These policies were developed to make the purchase of whole life insurance more attractive for individuals who have limited financial resources but will be able to afford a higher premium in the near future

Universal Life Option B

death benefit gradually increases each year by the amount that the cash value increases

Increasing Term Insurance

death benefit increases in the increasing term insurance

Annually Renewable Term Policies

death protection for Universal Life: provide a level death benefit for a premium that increases each year with the age of the insured. Purest form of term insurance.

Incontestability Clause

life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time

Increasing Term

the premium remains level for the term of the policy

Group Life Plan Conversion

if the master contract is terminated, every individual who has been on the plan for at lease 5 years will be allowed to convert to individual insurance of the same coverage. The employee usually has 31 days after terminating from the group in order to exercise the conversion option. The insured would not need to prove insurability for a conversion policy, the premium for individual coverage will be based on the insured's attained age

Level Premium Term Policy

if the policy renews at the end of the term, the premium will be based on the insured's attained age at the time of the renewal. Term policies do not develop cash values

20 Pay Whole Life

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

Variable Life Policy

flexible premium, cash value of a variable life policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer. Variable products are governed in part by the Securities and Exchange Commission, agents selling variable life policies must also secure a securities license. Minimum death benefit is guaranteed, policy owners bear the investment risk

Endowment at Age 65

has the characteristics of a whole life policy, except that the maturity date is prior to age 100

Endowment Policy

higher premium, faster growth of the cash value, has the characteristics of a whole life policy, except the maturity date is prior to age 100

Conversion from group to individual

if a person has a life insurance policy under a group plan and then leaves the group, he may convert group coverage to individual coverage within 31 days of leaving the group without proof of insurability

Group Life Insurance

premiums are determined by the age, sex and occupation of the entire group. Can be converted to an individual whole life, not term. participants receive a certificate of insurance. To purchase, the group must be formed for a reason other than purchasing insurance. There is no individual underwriting for group insurance

Graded Premium Whole Life

premiums are lower during the preliminary period and then increase each year until leveling off after the preliminary period

Graded-Premium Whole Life

premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will be level thereafter

Decreasing Term Policy

premiums remain level with a decreasing term policy, only the face amount decreases, it has a lower premium than level term, the contract pays only in the event of death during the term and there is no cash value, the face amount steadily declines throughout the duration of the contract

Jumping Juvenile Policy

provide a low face amount in the early years and then increase, usually by 5 times the amount, when the insured reaches an age specified in the policy (usually 21), the policy increases significantly in the face amount when the insured reaches a specified age

Credit Life Insurance

the creditor is the policy owner and the beneficiary, the debtor is the insured. Amount of insurance permissible is limited per borrower, premiums are usually paid by the borrower, benefits are paid to the creditor

Joint Life Policy

the death benefit is paid upon the first death only, covers the lives of two insureds

Decreasing Term

the face amount decreases, the premium remains constant throughout the life of the contract

Variable Products

the minimum death benefit is guaranteed, the cash value is not guaranteed, the policy owners bear the investment risk

Grace Period

extends the premium due date

Universal Life Insurance Policy

flexible premium, two types of interest rates- guaranteed and current. The insurer credits the cash value in the policy with a current (non guaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest. The death protection component is always Annually Renewable Term. Target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protect and to keep the policy in force for the lifetime, interest sensitive. The policy owner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. Components- insurance and cash account. policy owner can skip premium payments, provided that there is enough cash value in the policy to cover the premium amount

Adjustable Life

the owner has the following privileges: increasing or decreasing the premium, changing the premium paying period, increasing or decreasing the face amount of coverage, or changing the period of protection

Level Term

the premium remains level for the term of the policy, if the policy renews at the end of the term, the premium will be based on the insured's age attained age at the time of the renewal, a 20 year term policy is written to provide a level death benefit for 20 years

Universal Life

type of policy that allows the policy owner the ability to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount

Paid Up Addition Option

uses the dividend to purchase a smaller amount of the same type of insurance as the original policy

Credit Insurance

usually written as decreasing term insurance, the initial amount of credit life insurance may not exceed the total amount repayable under the contract of indebtedness

Spendthrift Provision

when a life insurance policy stipulates that the beneficiary will receive payments in specified installment or for a specified number of years, this provision prevents the beneficiary from changing or borrowing from the planned installments

Straight Life Policies

would be classified as a traditional level premium contract.