Types of Policies

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Pure Death Protection

- if the insured dies during this term, the policy pays the death benefit to the beneficiary - if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term - there is no cash value or other living benefits

permanent life insurance

A general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid.

Certificate of insurance

A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided.

Survivorship life

A life insurance contract which pays policy proceeds only upon the death of the last of two or more insureds covered by a combination plan. Lower premium then joint life.

Joint Life

A single policy that is designed to insure two or more lives.

Decreasing Term

A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy.

interest sensitive whole life

AKA current assumption life whole life policy that provides a guaranteed rate of interest comparable to money market rates and can have fluctuating premiums based on changing assumptions about risk, interest, and expense

Policyowner has the option of converting from term to whole life vice versa

Adjustable life

Renewable provisions

Allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability.

The insurance component of a universal life policy is always what?

Annually renewable term insurance

Juvenile life insurance

Any life insurance written on the life of a minor.

Indexed Whole Life (Equity Index Whole Life)

In this whole life insurance, the cash value is dependent upon the performance of the equity index, such as S&P 500 although there is a gauranteed minimum interest rate

Option B

Increasing death benefit option, the death benefit includes the gradual increase in cash values so that the death benefit gradually increases each year by the amount that the cash value increases.

Cash value is credited to current interest rates, usually comparable to money market rates. Can be higher than the guaranteed levels. Policy also provides for a minimum guaranteed rate of interest.

Interest sensitive whole life

Premium based on joint average age and the death benefit is paid upon the first death only

Joint Life

Increasing Term Insurance

Level premiums and a death benefit increases each year over the duration of the policy term

Variable life insurance is a securities product, so producers must be daily licensed in both what?

Life insurance and securities

Universal life offers one of two benefits to the policy owners. What are the two options?

Option A and Option B

In what universal option does the death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

Option B

Single Premium Whole Life

Paid up for life with one large premium payment and generates immediate cash

What does "level" refer to in level term insurance?

Refers to the death benefit, which does not change

Does the premium in term insurance lower, decrease, or stay level

Stays level

This type of policy is often used to offset the liability of the estate tax upon the death of the last insured

Survivorship life

Option A

The level death benefit option, death benefit remains level while the cash value gradually increases, lowing pure insurance with the insurer in later years.

How is the premium figured in term insurance

The premium is figured at attained age

Variable contract and securities are regulated by what?

The securities and exchange commision (SEC) and the Financial industry regulatory authority (FINRA)

Why is decreasing term insurance commonly purchased for?

To insure the payment of a mortgage or other debts if the insured dies prematurely.

Variable universal life

Type of insurance that combines many features of the whole life with the flexible premium of universal life and the investment component of variable life, making it a securities version of the universal life insurance

In this contract the policyowner bears the investment risk

Variable Contract

Policy where the cash value is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer

Variable life insurance

Policy owner has the option to increase or decrease premium, face amount, and change the period of protection

adjustable life

straight life insurance

aka ordinary life or continuous premium whole life. Is the basic whole life policy.

Term Life Insurance

aka pure life, temporary protection, Greatest amount of coverage for lowest premium. no cash value. premium goes up with age.

Variable Life Insurance

aka variable whole life insurance. A level, fixed premium, investment base product, guaranteed minimum death benefits.

Flexible premium policies

allow the policyowner to pay more or less than the planned premium

Converting

changing from term to whole and vice versa, new policy will usually require proof of insurability

limited-payment life insurance

designed so that the premiums for coverage will be completely paid-up well before age 100.

Adjustable life

developed in order to provide the policyowner with the best of both worlds (term and permanent coverage)

Convertible provision

give the policyownee the right to convert the policy to a permanent insurance policy, without evidence of insurability.

Participants under this plan do not receive a policy because they do not own or control the policy

group life insurance

Return of premium

increasing term insurance that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

2 Components of Universal Life

insurance component and cash account

Master policy contract

is issued to the sponsor of the group which is often an employer

A common juvenile policy is known as..

jumping juvenile because the face amount increases at a predetermined age, usually 21.

The face amount jumps at predetermined age but the premium remains level

jumping juvenile policy

3 types of term coverage

level, increasing, decreasing

Group Life Insurance

life insurance that provides a master policy for a group; each eligible group member receives a certificate of insurance

Has higher annual premium and cash value builds up faster

limited payment life insurance

Level Term Insurance

most common type of temporary protection purchased

Universal Life Insurance (flexible premium adjustable life)

policyowner has the option to increase the amount of the premium paid and to later decrease it again. Can skip a paying a premium and policy wont lapse as long as there is sufficient cash value at the time

are premiums for whole life usually higher or lower than term insurance?

premiums in whole life are usually higher than term life

whole life insurance

provides lifetime protection, and includes a savings element (or cash value)

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

Minimum premium

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

if insured remains healthy and still alive when a return of premium policy expires what happens to premium?

the insurance company guarantees a return of premium

Level Premium

the premium and death benefit that does not change throughout the life of a policy

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.

what policy is interest sensitive?

universal life insurance

Policy where assets must be held in separate accounts

variable life

these are dually regulated by the state and federal government

variable life insurance and variable annuities

Unlike universal life, most of the investment vehicles in this policy do not guarantee a return on investment

variable universal life insurance

what policy has fixed interest rate?

whole life

What provided lifetime (permanent) protection and accumulates cash value?

whole life insurance


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