Insurance Chapter 4
Whole Life Insurance
A permanent life policy that guarantees the death benefit, premium and cash values. Also called straight whole life insurance. (4-3)
Term Life Insurance
A policy that provides protection only for a stated number of years. If the insured dies within that period of time, a beneficiary will receive the proceeds. If the insured is alive at the end of that period of time, the policy has no value. See beneficiary, insured and cash value. (4-1)
Convertible Term
A term life policy that may be exchanged to a permanent life policy without evidence of insurability. (4-3)
Renewable Term
A term life policy that may be renewed for the same specified number of years without evidence of insurability. (4-3)
Industrial Life Insurance
A type of insurance in which the policies are sold in small amounts and an agent of the company collects the premiums at the insured's home
Annually Renewable Term (ART)
A type of term insurance that provides coverage for one year, then automatically renews at the end of the policy year for another year without evidence of insurability. See term insurance. (10-2)
Increasing Term Insurance
A type of term life insurance in which the death benefit increases over the policy's term. It is usually purchased
Level Term Insurance
A type of term life insurance in which the death benefit remains constant over the policy's term. See term insurance. (4-2)
Decreasing Term Insurance
A type of term life insurance usually sold in connection with a debt or loan to protect the lender in case the borrower (insured) dies before the loan is repaid. The face amount of the policy is tied to the loan and is reduced as the debt is paid off. At the expiration of the term, the face amount is zero. See term insurance; also see mortgage insurance. (4-2)
Death Benefit
Life insurance policy proceeds paid to the beneficiary upon death of the insured. See policy proceeds and beneficiary. (4-2,3,4)
Ordinary Life Insurance
Marketed to individuals. Agent collects the initial premium.
Re-Entry Option
Option for some renewable term policies. Somewhat offsets the increasing cost when the policy is renewed. If the insured demonstrates continued insurability by taking a physical exam, the premium increase will be less severe.
Group Life Insurance
Written for employer groups, credit unions or associations. One policy covers all insureds. The group is underwritten.