3) Permanent Life Insurance

Endowments

Another type of WL insurance that provides a permanent, level death protection if the insured should die prematurely and they accumulate cash values.

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration

What would help prevent a universal life policy from lapsing?

Target premium

Which types of policies will provide permanent protection?

Whole Life

Permanent Life insurance

life insurance that provides a death benefit plus a savings plan and lasts for the policyholder's lifetime

Variable Life insurance

is a level fixed premium investment-based product

Level Premium

A policy premium that remains the same over the period of time premiums are paid.

LP-65

Coverage is completely paid up for by the insured age 65

4 Key characteristics of Whole Life insurance

Level Premium Death benefit Cash Value Living Benefits

Converting

The policyowner also has the option of _________ from term to whole life or vice versa.

Contract interest rate

Usually 3 to 6%

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

greatest

Variable Life insurace

have fixed premiums and a guaranteed minimum death benefit

Current interest rate

not guaranteed in the contract but may be higher because of current market conditions

Limited Pay Whole Life

premiums for coverage will be completely paid up well before age 100

Whole life insurance

provides lifetime protection and includes a savings element or cash value.

Universal Life Insurance (Flexible premium adjustable life)

An interest sensitive policy that Implies the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again.

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

In a variable whole life policies where are the policy premiums allocated?

Separate account

Term Insurance

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

Which types insurance policies provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

Option B (Increasing Death Benefit option)

The death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.

What is not true regarding a Variable Universal Life Policy?

The death benefit is fixed

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

Which of the following determines the cash value of a variable life policy?

Performance of the policy portfolio

Term insurance

Provides the greatest amount of coverage for the lowest premium (has no cash value)

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

Living Benefits

benefits that allow the policyholder to receive a portion of death benefits prior to death

Fixed life insurance/annuities

contracts that offer guaranteed minimum or fixed benefits that are stated in the contract.

Cash Value

created by the accumulation of premium, is schedule to equal the face amount of the policy out to the policyowner.

Two components of a Universal Life Policy:

Insurance Component and a Cash account.

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

Option A (Level Death Benefit option)

The death benefit remains level while the cash value gradually increases, thereby lowering the pure insurance with the insurer in the later years.

Adjustable Life

can assume the form of either term insurance or permanent insurance. The insured typically determines how much coverage is needed and the affordable amount of premium

What if an insured skips a premium payment on a universal life policy?

The missing premium may be deducted from the policys cash value.

Death Benefit

guaranteed and also remains level for life

20-Pay life

Version of limited pay whereaby coverage is completely paid for in 20 years.

Whole life Insurance

What provides lifetime protection and accumulates cash value

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

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For20 years or until death which ever occurs first

The options a policy owner can make in his/her policy.

Increase or decrease the premium or the premium-paying period, Increase or decrease the face amount; or change the period of protection

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower

Single Premium Whole Life SPWL

designed to provide a level death benefit to the insureds age 100 for one-time, lump-sum payment.

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Limited-Pay life

Two type of premiums a policyowner can pay

Minimum - amount needed to keep the policy in force for the current year; Target - 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.

Three basic forms of whole life insurance

straight whole life, limited pay whole life and single-premium whole life

Primary difference between a whole life policy and an endowment is

that an endowment matures at an earlier age because the cash value is an endowment has to build up faster since the funds are intended to be used while the insured is alive.

Flexible Premium Policies

Allow the policyowner to pay more or less than the planned premium.

Ordinary (Straight) Life

the basic whole life policy, the policyowner pays the premium from the time the policy is issued until the insureds death or age of 100

Indeterminate premium reduction policy

the premium is guaranteed for an initial period and then the insurer can charge up to a maximum premium charge that is specified in the policy.