chapter 2 - types of insurance policies
What kind of policy allows withdrawals or partial surrenders?
Universal Life
Minimum Premium
the amount needed to keep the policy in force for the current year
Decreasing Term
This type of life insurance policy is unique b/c the death benefits decrease on a scheduled basis. Most commonly used to cover a mortgage or other type of loan.
In a survivorship life policy, when does the insurer pay the death benefit
Upon the last death
Option B Level
annual increases - at any point the total death benefit will be equal to the face amount of policy plus the current amount of cash value.
Level Premium
the premium that does not change throughout the life of a policy
Annuitant
The person that buys an annuity; may or may not be an annuity's policyowner.
Permanent
lasting or expected to last for a long time
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.
When would a whole life insurance policy mature?
When the insured dies or turns age 100, whichever is sooner
Living Beneifts
the policyowner can borrow against cash value while the policy is surrendered.
The least expensive first-year premium is found in which of the following policies
annually renewable term
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
Fixed Annuity
An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment or payments.
Indexed Life
Face amount increases based on the performance of an equity index, such as the S&P 500 with a guaranteed minimum interest rate and fixed premiums
Single Premium Whole Life
Is designed to provide a level death benefit to the insured's age 100 for a one time lump sum payment
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
Which of the following is not true about a joint and survivor annuity benefit option
Payments stop after the first death among the annuitants.
Death Benefit
The amount payable upon the death of the person whose life is insured.
Variable Universal Life
a product that blends many features of whole life, universal life, and variable life. Key features are premium flexibility, cash value investment control, and death benefit flexibility.
Universal Life Insurance
a whole life policy that combines term insurance and investment elements
Straight life
is the basic whole life policy
what are the three basic types of terms life insurance?
level , increasing, and decreasing
Variable Life Insurance
life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder
Straight life policy
premium is based on your age at inception and remains fixed over the policy life. before age 100
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
cash value
the amount received after giving up a life insurance policy
All of the following are true regarding a decreasing term policy except
the payable premium amount steadily declines throughout the duration of the contract
Annually Renewable Term
the purest form of term insurance. The 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.
Variable Whole Life Insurance is based on what type of premium?
Level fixed
Adjustable Life
Life insurance which permits changes in the face amount, premium amount, period of protection, and the duration of the premium payment period.
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
For 20 years or until death, whichever occurs first.
Level Term Insurance
is 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.