Virginia Life: Life Insurance Policies (A-B)

Straight Whole Life, Limited-Pay Whole Life, and Single Premium Whole Life

3 basic forms of whole life insurance:

Cash Value

A policy's savings element or living benefit

Renewable Provision

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

Continuous Premium (Straight Life)

Basic whole life policy, Lowest annual Premium. Policyowner pays the premium from the time the policy is issued until the insured's death or age 100.

Variable Life insurance Products

Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

Limited Payment Whole Life

Designed so that the premiums for the coverage will be completely paid-up well before age 100. Cash value builds up faster for the limited-pay policies

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. Policy is completely paid-up after one premium and generates immediate cash.

pays the death benefit to the beneficiary

During the "Pure Death Protection" plan, if the insured dies during this term, the policy

Decreasing Term

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 if the insured dies prematurely

Securities

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

Permanent Life Insurance

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.

Policy Maturity

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

Level Premium, Death Benefit, Cash Value, Living benefits

Key characteristics of whole life insurance:

Increasing Term

Level premiums and a death benefit that increases each year over the duration of the policy term, often used by insurance companies to fund certain riders that provide a refund of premiums or a gradual increase in totally coverage, such as the cost of living or return of premium riders.

Return of Premium (R-O-P)

Life insurance is an increasing term policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid. Structured to consider the low risk factor of a term policy but at a significant increase in premium cost (25-50%).

Whole Life Insurance

Lifetime protection, including a savings element (cash value)

Renewable, Convertible, or Both (R&C)

Most term insurance policies are ______

Lapse

Policy termination due to nonpayment of premium

Level Premium Term

Provides a level death benefit and a level premium during the policy term.

Convertible Provision

Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability

Level, Fluctuate

Regardless of the type of term insurance purchased, the premium is _____ throughout the term of the policy; only the amount of the death benefit may _____, depending on the type of term insurance.

Term Insurance (Pure insurance)

Temporary protection because it only provides coverage for a specific period of time.

No Cash Value

Term insurance has ____

Pure Death Protection

Term insurance provides what is known as _____

Level, Increasing, Decreasing

The 3 basic types of term coverage are:

Equity Index (Indexed Whole Life)

The cash value is dependent upon the performance of the equity index, such as "S&P 500" although there is a guaranteed minimum interest rate. Face amount increases annually to keep pace with inflation without requiring evidence of insurability.

Attained Age

The insured's age at the time the policy is renewed or replaced

Level Term Insurance

The most common type of temporary protection purchased

Annually Renewable Term (A-R-T)

The purest form of term insurance, where 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

death benefit that does not change throughout the life of the policy

The word "level" refers to ______

how the face amount (death benefit) changes during the policy term

There are 3 basic types of term coverage available, based on ______

Age

There is usually a maximum ____ above which coverage will not be offered or at which coverage cannot be renewed

Increasing Term

This type of policy would be ideal to handle inflation and the increasing cost of living

Accumulate

To build up

Endow

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

Interest Sensitive Whole Life (Current Assumption Life)

Whole life policy that provides a guaranteed death benefit to age 100, interest-sensitive policies credit the cash value with the current interest rate that is usually comparable to money market rates, and can be higher than the guaranteed levels.

Deferred

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

Term

_____ policies provide the greatest amount of coverage for the lowest premium as compared to any other form of protection

Nonforfeiture values

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

Fixed Life Insurance products

contracts that offer guaranteed minimum or fixed benefits

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