Ch. 3 Life Insurance Policies

What are the death benefit options in universal life policies?

-level premium -increasing DB

What are the 3 basic forms for Whole Life?

1. Straight 2. Single Premium 3. Limited Pay 4. others

The death protection component of Universal Life Insurance is always:

annually renewable term

Continuous Premium (Straight Life) Policy?

- Basic Whole life - Pays from issue date till insureds death - level premium - Cash value increases

All other factors being equal, the least expensive first-year premium is found in:

Annually Renewable Term

Juvenile Life

Any life insurance written on the life of a minor.

Which component increased in the increasing term insurance?

Death Benefit

A return of Premium term life policy is written as what type of term coverage?

Increasing

A return of premium term life policy is written as what type of term coverage?

Increasing term

A Straight Life policy has what type of premium?

Level

Level term Life Insurance

Level Death Benefit, Level Premium, most common

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited Pay Whole Life

What are the different options in Universal Life?

Option A: level death benefit Option B: increase death benefit

Who regulates Variable Life products

State and federal government, SEC, FINRA, & Insurance department

Universal Life

Term policy with cash value

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy inforce

Joint Life

Two or more insureds. Pays upon death of the first to die

Survivorship Life

Two or more insureds. Pays upon death of the last

Indexed Life

Whole life policy with a cash value is dependent upon performance of equity index.

Variable Life

level, fixed premium, investment based product

Renewable

policy can be renewed for additional periods without evidence of insurability

Securities

stocks and bonds

When would a 20-pay life policy endow?

when insured reaches age 100

Deferred

withheld or postponed until a specified time or event in the future

Characteristics of Group Life

- purpose of the group - Size of the group - Turn over of the group - Financial strength of the group

Limited Payment policy

- same as straight life but premium is paid up until a certain age.

What are the Flexible premium policies?

1. Adjustable 2. Universal

What is another name for "second-to-die" policy?

survivorship

Face Amount

the amount of benefit stated in the life insurance policy

Policy maturity

the time when the face value is paid out

Variable Universal Life

variable + universal

Increase Term Insurance

-Premium is level - Death Benefit Increases ( to handle inflation, or cost of living)

A domestic insurer issuing variable contracts must establish 1 or more:

separate accounts

Attained Age

the insured's age at the time the policy is issued or renewed

Decreasing Term Insurance

-Premium is level - Death Benefit decreases - Not renewable - Convertable

Annually Renewable Term

-Renews each year without proof of insurability -Premiums are level but increase @ renewals due to attained age

When will the insured be able to receive the full face amount from a whole life policy?

If insured lives to be age 100

What license must the agent have to sell Variable Life?

Securities and life insurance

Endow

to have the cash value of a whole life policy reach the contractual face amount

Convertible

policy that can be exchanged for another policy without showing insurability

Insurers are required to give the insured converting to an individual policy notice of their conversion privilege of how long?

15 days

Explain conversion to Individual policy

If insured leaves group - employee has a right to convert to an individual policy without proving insurable. 31 days after leaving group

Which Universal Life option has a gradually increasing cash value and a level death benefit

Option B (increasing DB)

Return of Premium

Policy refunds every penny of the premiums if one outlives the policy term

Most term insurance policies are ______________ and _____________.

Renewable and convertible

Which features of an adjustable life policy can be changed by owner?

- premium - face amount - period of protection

Characteristics of Whole Life Insurance

- Permanent - Cash value & other living benefits - effective for entire life till age 100 - Level premium forever - death Benefit

Characteristics of Term Life Insurance

- Temporary - a lot of coverage for lowest premium - max age where term cannot be offered/renewed - insured must die when policy is active - No cash value

3 Types of Term Life Insurance

1. Level, Increase, & Decrease (DB)

Adjustable Life

Permanent + Term Combines permanent and term life policies allowing changes to face amount, period payments, and term during policy lifetime.