Life Insurance Polices
joint life
* Premium is based on the joint average age of the insured * Death benefit upon the first death only
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.
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, costs lower since longer time paying premiums, used to offset liability of estate tax
single premium whole life (SPWL)
Designed to provide a level death benefit to the insured's age 100 for a one-time, lump-sum payment. The policy is completely paid-up after one premium and generates immediate cash.
convertible provision
Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability
level term insurance
The most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy.
annually renewable term is
a form of level term insurance that offers the most insurance at the lowest cost
variable life insurance
a level, fixed premium investment-based product. Guaranteed minimum death benefit Cash value is not guaranteed and fluctuates with the performance of the portfolio in which premiums have been invested by insurer, owner takes the risk
renewable provision
allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability
in order to sell a variable product, what credentials do you need?
be registered with FINRA, have a securities license, be licensed by the state
Nonforfeiture Values
benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
Fixed (Equity) Indexed Life
cash value is dependent upon the performance of the equity index such as S & P, does have a guaranteed minimum interest rate
Variable life insurance products
contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
Fixed life insurance products
contracts that offer guaranteed minimum or fixed benefits
Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type?
death benefit
increasing coverage
death benefit starts at 0 and increases each year, RIDER not a policy
Conversion Privilege for group plans
employee has the right to convert to an individual policy without proving insurability, can convert to any form of insurance except term insurance. 31 period after terminated to exercise the conversion option
level coverage
fixed death benefit for period
Universal life (flexible premium adjustable life)
has the flexibility to increase the amount of premium paid into the policy and then decrease it again. can even skip a premium as long as enough is in cash value
option B universal life
increasing death benefit
universal life policy has two components
insurance component and a cash account
the insurance component of a universal life policy
is always annually renewable term insurance
Option A Universal Life
level death benefit option, more common
key characteristics of whole life insurance
level premium, death benefit remains level, cash value, living benefits
three basic types of term coverage available
level, increasing, decreasing
with term insurance, what fluctuates?
only the death benefit, NOT the premiums
continuous premium/ straight whole life insurance
policy owner pays the premium from the time the policy is issued until the insured's death or age 100, lowest annual premium
limited payment insurance
premiums for coverage will be completely paid off well before age 100, annual premium will be higher. cash value builds up faster for this policy
level premium term insurance
provides a level death benefit and level premium during the policy term, if renewing at the end of term the premium with then be bases on the insured attained age
whole life insurance
provides lifetime protection, and includes a savings element (or cash value), premiums are usually higher than term
annual renewable term
purest form of term insurance. death benefit remains level and policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually to the attained age
characteristics of group plans
purpose of group, size, turnover, financial strength
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
If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?
require evidence of insurability
where are the assets of a variable life insurance policy held?
separate account
decreasing coverage
starts at a specific amount and decreases each year, ends at 0, decreasing obligation like a mortgage, goes with credit life insurance
term insurance / pure life insurance
temporary protection because it only provides coverage for a specific period of time, greatest amount of coverage for the lowest premium
the minimum premium
the amount needed to keep the policy in force for the current year. Paying the minimum premium will make the policy perform as an annually renewable term product.
face amount
the amount of benefit stated in the life insurance policy
level premium
the premium that does not change throughout the life of a policy
endow
to have the cash value of a whole life policy reach the contractual face amount