Types of Life Policies

family protection policy (family policy)

a combination of whole life on the primary insured and (renewable) level term family riders on the spouse and children

adjustable whole life insurance

a policy in which an insured may adjust the face amount of the policy, where the amount and/or frequency of premium payments or the period of protection generally without any underwriting

level premium term life insurance

a policy in which both the premium and the face amount stay the same for a period of time, but increase dramatically at renewal

decreasing term

a policy in which the premium stays the same each year, but the amount of coverage decreases

family maintenance policy

a policy that combines whole life insurance and a level term rider, but both cover the same person

family income policy

a policy that combines whole life insurance with a decreasing term rider also written on the same person

credit life insurance

a policy, individual or group, that is usually written on a group basis and proceeds are payable to the creditor to extinguish the debt

payor benefit

a rider or provision, usually found in juvenile policies, under which premiums are waived if the payor of the premium (parent) becomes disabled or dies while the child is still a minor

term life insurance

a temporary insurance that is the most inexpensive type of life insurance to buy in the short run since it does not accumulate any cash values, but can be the most expensive in the long run

convertible term

a term life insurance that is convertible to whole life insurance without a physical exam at any time

decreasing term life insurance

a term life policy where the premium stays level over the term, but the amount of coverage decreases; not renewable

mortgage redemption policy

a type of decreasing term life insurance that is set up so that the amount of protection will not be more and not than the amount of the policyowner's mortgage at the time of their death

variable/universal life insurance

a type of insurance that has both a flexible premium and a rate of return that depends upon the performance of the underlying separate account

universal life (sensitive whole life)

a type of whole life insurance with a flexible premium, which requires lower or no premium once the cash value in the policy is sufficient, and a current interest rate, which is attractive at a time of increasing interest rate

joint life insurnace

a whole life policy that covers two insured, but only pays a death benefit when the first insured dies

level term insurance

an insurance where the amount of insurance protection remains constant during the policy period

2 types of level term life insurance

annual renewable term and level premium term

re-entry option

gives the insured the opportunity to pass a physical exam at the end of the term in order to quality to renew the policy at a lower premium rate

non-par (non-participating) life insurance

policies issued by stock insurers, which are owned by their shareholders, who might participate in the insurer's profits in the form of dividends

par (participating) life insurance

policies that are issued by mutual insurers, which are owned by their policyholders, who might participate in the insurer's profits in the form of dividends; not taxable

noncontributory premium

premium paid entirely by the employer

renewable term

term insurance that can be renewed without proof of the insured's insurability

persistency

the percentage of policies that have not lapsed

types of ordinary life

whole life, term, and endowment; aka individual life insurance

joint-and-survivorship life insurance

a whole life policy that is similar to joint life, but only pays a death benefit when the second insured dies

20 Pay Life/30 Pay Life

a whole life policy that requires the client to pay all of the premiums in just 20 or 30 years

Life Paid Up at 65 (LP65)

a whole life policy that requires the client to pay all of their premiums by age 65; requires higher premium within a shorter period of time

limited pay policy

a whole life policy where the premium is paid over a shorter period of time

graded premium whole life policy

a whole life policy with much lower premiums for the first five years, but an gradually increasing policy for the following until a point where they remain at an amount higher than they would have been in a traditional whole life

return of premium rider

allows one to buy an increasing amount of term insurance that always equals the total amount premiums paid to date

universal life insurance

an adjustable benefit life insurance contract that accumulates cash value and has a flexible premium

variable life insurance

a type of level premium whole life insurance in which the cash value is invested in a separate account

modified premium whole life policy

a whole life policy in which the insured would pay the reduced for a specified period of time, during which the cash values would build very slowly, and increase substantially after that period

single premium policy

a whole life policy that becomes fully paid up by paying just one large premium at policy inception; policies of this kind are seldom sold but develop an immediate cash value

indexed whole life

a policy in which the face amount of the policy will vary based upon the performance of a specific index of prices

annual renewable term life insurance

a policy in which the face amount stays level, but the premium increases each year; most will not renew beyond age 65

whole life insurance

a policy that covers the insured until they die; aka level premium continuous premium whole life or traditional whole life insurance; most reach maturity at age 100, in which the accumulated cash value will equal the face amount

convertible term life insurance

a policy that is convertible at any time to whole life insurance without a physical exam to make term life insurance easier to sell

mortgage protection life insurance

a policy that will pay no more and low less than the amount of the unpaid mortgage upon the death of the insured

jumping juvenile policy

a policy where the face amount of the policy will increase by a multiple, usually five, of the original face amount when the insured reaches 18

industrial (home service) life

a policy with a grace period of 28 days, in which premium was paid weekly; sold by mail (direct response) only

group life

a policy written for employer groups and consists of annual, renewable level term insurance

contributory premium

premium shared by the employer and employee

level premium

premium that does not increase or decrease for as long as the policy remains in force; with time, cash value increases and risk decreases

participation requirements

requirements for a certain percentage of employees to enroll in the group life insurance policy coverage