Indiana Life and Health-Life Insurance Policies
Permanent Life Insurance
A general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid.
Modified Life
A type of whole life policy that charges a lower premium in the first few policy years, then a higher level premium for the remainder of the insureds life
Interest Sensitive whole life
Also called current assumption life. Is a fixed rate premium policy that provides guaranteed death benefit at 100. It credits the cash value with the current interest rate that is usually comparable to money market rates. It also provides for a minimum guaranteed rate of interest.
Decreasing Term Policies
Feature a level premium and a death benefit that decreases each year over the duration of the policy term. Commonly purchased to insure the payment of a mortgage or other debts
Permanent Life Insurance
General term used to refer to various forms of whole life insurance policies that remain in effect to age 100 as long as the premium is paid, and also includes a savings element (cash value)
Whole Life Insurance
Provides lifetime protection, and includes a savings element (or cash value). Whole life polices endow at age 100, meaning the cash value created by the accumulation of premium is scheduled to equal the face amount of the policy at age 100.
Straight life (continuous premium whole life)
The basic whole life policy. The policyowner pays until the insured's death or age 100. Of the common whole life policies, straight life will have the lowest annual premium.
Two types of premiums for Universal Life
-Minimum premium is the amount needed to keep the policy in force for the current year. This will make the policy perform as an annually renewable term contract. -Target premium is a 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
Fixed life insurance
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Convertible Term
The convertible provision provides the policy owner the right to convert the policy to a permanent insurance policy without evidence of insurability
Key Characteristics of Whole Life Insurance
-Level premium: the premium for whole life policies is based on issue age, therefore remains the same throughout the life of the policy -Death benefit: the death benefit is guaranteed and also remains level for life -Cash value: the cash value, created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches 100 -Living benefits: the policyowner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered
Universal Life insurance
The policy owner has the flexibility to increase the premium being paid into the policy and later decrease it again.
Adjustable Life
Was developed in an effort to provide the policy owner with the best of both worlds (term and permanent). An adjustable life policy can assume the form of either term or permanent. The insured typically determines how much coverage is needed, the affordable amount of premium. The insurer will then determine the appropriate type of insurance to meet the insured's needs. As their needs change, the policyowner can make adjustments in their policy.
Limited-pay
Whole life designed so that the premiums for coverage will be completely paid-up well before age 100
Options for Adjustable Life owners
-Increase/decrease the premium or the premium-paying period -Increase/decrease the face amount -Change the period of protection
Single premium whole life
Designed to provide a level death benefit to ago 100 for a one-time, lump-sum payment.
Level Premium Term
Provides a level death benefit and a level premium during the policy term
Three Types of Term Coverage
-Level -Increasing -Decreasing
Increasing Term Policies
Feature level premiums and a death benefit that increases each year over the duration of the policy term.Often used by insurance companies to fund riders that provide a refund of premiums or a gradual increase in overall coverage
Level Term Insurance
Most common, refers to the death benefit that doesn't change throughout the life of the policy
Graded premium whole life
Premiums start out relatively low and then level off at a point in the future. The premium typically starts at approximately 50% or lower than the premium of a straight life policy. It then gradually increases each year for a period of usually 5 or 10 years, and then remains level thereafter.
Annually Renewable Term
Purest form of term insurance, death benefit remains level, the policy is guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age
Term Life Insurance
Temporary life insurance provided for a specific period of time