Types of Life insurance Polices
whole life insurance
(Straight Life )Permanent level insurance protection for the "whole of life," from policy issue to the death of the insured. Characterized by level premiums, level benefits and cash values.
Principal Sum (AD&D)
(face amount) pays out if death occurs
Limted payment
A form of whole life insurance characterized by premium payments only being made
Level Premium
A policy premium that remains the same over the period of time premiums are paid.
Convertibility provision
Allows Term policy conversion to Permanent policy w/out medical exam; must be identical or lower death benefit; based on either attained OR original age.
Renewability Insurance
An option sometimes found in term life insurance policies that allows insured to continue purchasing the same policy without having to demonstrate that they are still insurable. Premium paid by insured is paid back if insured alive at the end of the term.
Policy Surrender
Canceled...When a policy is surrendered for the cash value, some of the cash value received may be taxable, if the value was more than the amount of the premiums paid for the policy.
Fixed premium Schedule
Mode of payment for the policy level premium on a fixed schedule.
Single Premium Whole Life
Paid up for life with one large premium payment
Whole life insurance
Permanent Insurance policy which is guaranteed to remain in force for the insured's entire life.
Return of premium term insurance
Premiums are returned at the end of the term period. Good to buy. Good for a divorce couple where the courts tell the other to pay for insurance.
principal
The amount of money borrowed
Death Benefits Components
The cash value, sometimes referred to as the savings element: An insurance protection element that must be paid in addition to the cash value so that the death benefits equals the policy's face amount.
Increasing Term Insurance
The death benefit begins at zero and grows over the term of coverage. Death benefit increases and Premium increase.
Decreasing Term Insurance
The death benefit declines over the coverage period until it reaches zero at the end of the term. Examples home mortgages, bank loans, or financial obligation that requires regular periodic payments. Not to renew Death decreases and premium stays the same.
Fixed Level Death Benefit
for as long as the policy is in force the fact amount remains the same.
Cash Value
the amount received after giving up a life insurance policy.
Level Term Insurance
the death benefit the face value of policy remains the same from the date the policy is issued until the date the policy is issued. Premium is level and death benefit is level.
