Types of Life Policies

The _______________ provision provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability.

convertible

Liquidation of an estate

converting a person's net worth into a cash flow

A _____________ annuity is an annuity in which the income payments begin sometime after one year from the date of purchase.

deferred

Securities

financial instruments that may trade for value (for example, stocks, bonds, options)

How premiums are invested

fixed variable

Term insurance provides the _________ amount of coverage for the _________ premium.

greatest; lowest

Shorter life expectancy = _________________ benefit; longer life expectancy = ________ benefit.

higher; lower

Term insurance has no ____ _____.

cash value

The _______________ ________ is the time when the annuity benefit payouts begin (trigger for benefits).

annuitization date

Adjustable Life

*Key Features: Can be Term or Whole Life; can convert from one to the other *Premium: Can be increased or decreased by policyowners *Face Amount: Flexible; set by policyowner with proof of insurability *Cash Value: Fixed rate of return; general account Policy Loans: Can borrow cash value

Variable Life

*Key Features: Permanent insurance *Premium: Fixed (if Whole Life); flexible (if Universal Life) *Face Amount: Can increase or decrease to a stated minimum *Cash Value: Not guaranteed; separate account Policy Loans: Can borrow cash value

Universal Life

*Key Features: Permanent insurance with renewable term protection component *Premium: Flexible; minimum or target *Face Amount: Flexible; set by policyowner with proof of insurability *Cash Value: Guaranteed at a minimum level; general account Policy Loans: Can borrow cash value

Multiple life annuities cover ...

2 or more lives. The most common multiple life annuities are joint life, and joint and survivor.

______________ period is the time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant.

Annuitization

Agents selling variable life insurance products must:

Be registered with FINRA; Be licensed by the state to sell life insurance; and Have received a securities license.

What is another name for interest-sensitive while life insurance?

Current assumption life

Which policy component decreases in decreasing term insurance?

Face amount

A fixed annuity provides the following features:

Guaranteed minimum rate of interest to be credited to the purchase payment(s); Income (annuity) payments that do not vary from one payment to the next; and The insurance company guarantees the specified dollar amount for each payment and the length of the period of payments as determined by the settlement option chosen by the annuitant.

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

Increasing

What is the "first to die" policy?

Joint Life Insurance

3 basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term:

Level, Increasing, and Decreasing.

Term Life General characteristics

Pure protection Lasts for specific term No cash value

Premium payment method: single premium vs. periodic

Single premium: one-time lump-sum payment. Periodic: can be either level premium, in which the annuitant/owner pays a fixed installment, or flexible premium, in which the amount and frequency of each installment varies.

What is the "second to die" policy?

Survivorship Life Insurance

Different classes of insurance

Term, whole life, universal, variable

Nonforfeiture values

benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

pure life this payment ceases at the annuitant's death (no matter how soon in the annuitization period that occurs).

This option provides the highest monthly benefits for an individual annuitant. Under this option, while the annuity payments are guaranteed for the lifetime of the annuitant, there is no guarantee that all the proceeds will be fully paid out.

3 main characteristics of variable annuities:

Underlying Investment: the payments that the annuitant makes into the variable annuity are invested in the insurer's separate account, not their general account. Interest Rate: issuing insurance company does not guarantee a minimum interest rate. License Requirements: SEC, life insurance license, FINRA registration.

__________ life insurance is regulated by both state and federal government, as well as the insurance department and the SEC.

Variable

________ ___________ life is a combination of universal life and variable life. - Flexible premiums and an adjustable death benefit. - The policyowner decides where the cash value will be invested. - The cash values are not guaranteed, and the death benefit is not fixed.

Variable universal

_________ _____ life insurance is a level, fixed premium, investment-based product.

Variable whole

Cash refund

When the annuitant dies, the beneficiary receives a lump-sum refund of the principal minus benefit payments already made to the annuitant. Cash refund option does not guarantee to pay any interest.

Installment refund

When the annuitant dies, the beneficiary will continue to receive guaranteed installments until the entire principal amount has been paid out.

The joint and survivor arrangement is ....

a modification of the life income option in that it guarantees an income for two recipients that neither can outlive.

Cash value

a policy's savings element or living benefit

The ________________ period is the period of time over which the owner makes payments (premiums) into an annuity. Furthermore, it is the period of time during which the payments earn interest on a tax-deferred basis.

accumulation

With fixed-amount installments, the __________ selects how much each payment will be, and the ________ determines how long the benefits will be paid by analyzing the value of the account and future earnings.

annuitant; insurer

Life with Guaranteed Minimum settlement option

if the annuitant dies before the principal amount has been paid out, the remainder of the principal amount will be refunded to the beneficiary. It guarantees that the entire principal amount will be paid out.

An _____________ annuity is one that is purchased with a single, lump-sum payment and provides income payments that start within one year from the date of purchase.

immediate

When income payments begin

immediate deferred

Policy maturity

in life policies, the time when the face value is paid out

Premium rates on a _______ life policy are determined by averaging the ages of both insureds.

joint

The death benefit does NOT change with _____ term insurance.

level

Variable whole life insurance is a _______ _________ premium investment-based product.

level fixed

Key characteristics of whole life insurance:

level premium, death benefit, cash value, living benefits

Under a straight life annuity if the annuitant dies before the principal amount is paid out, the beneficiary will receive

nothing; the payments will cease

Single life annuities cover ...

one life, and annuity payments are made with reference to one life only. Contributions can be made with a single premium or on a periodic premium basis with subsequent values accumulating until the contract is annuitized.

Parties of an annuity:

owner, annuitant, beneficiary

Whole life insurance provides lifetime (_____________) protection and accumulates ____ _____.

permanent; cash value

Disposing of proceeds:

pure life, annuity certain, or life refund annuity

Renewable

renew the policy without evidence of insurability

Annuities certain are _____-term annuities that _______ the amounts paid to a certain fixed period or until a certain fixed amount is liquidated.

short; limit

Two types of life insurance coverage:

temporary and permanent protection

Face amount

the amount of benefit stated in the life insurance policy

Endow

the cash value of a whole life policy has reached the contractual face amount

Attained age

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

Level premium

the premium that does not change throughout the life of a policy

The fixed-period option pays for a specific _____ only, whether or not the annuitant is living.

time

If an insured skips a premium payment on a _____________ life policy, the missing premium may be deducted from the policy's cash value. The policy will NOT lapse

universal

A _______ annuity serves as a hedge against inflation, and is variable from the standpoint that the annuitant may receive different rates of return on the funds that are paid into the annuity.

variable

In ___________ contracts, the policyowner bears the investment risk (assets in a separate account).

variable

Deferred

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