Life Insurance Chapter 3 - Type of Policies

Term Rider

Additionally family members are covered under one policy Cheaper than every family member getting their own

Target Premium

Premium used in universal life policies Doe not guarantee there will be adequate funds to maintain the policy to any time

Level Premiums

Based on the age of the individual Premium remain the same throughout the entire life of the policy

Straight Whole Life Insurance

Basic whole life insurance Fixed premium for the time the policy is issued until the insured's death or age 100

Term Life Insurance

Biggest amount of coverage for a limited period of time. There is a TERMination date. If the policy is canceled prior to insured's death, nothing is payable

Variable Universal Whole Life

Can control the investment of cash values and select the timing and amount of premium payments Control how much and when premium is due, what investment accounts were used for funding and where the returns from those investment accounts went

Renewable Term Insurance

Continue term coverage after expiration of policy without proof

Level Term Insurance

Covers for a specific time period with lowest premium. "Level" means death benefit does not change throughout the life of the policy

Level Death Benefit

Death Benefit is guaranteed and remains level for entire lifetime of the policy

Limited Pay Whole Life Insurance

Premiums will be completely paid before age 100 20 year pay - coverage is completely paid in 20 years 65 year pay - coverage is completely paid by the time insured is 65

Non-Medical Life Insurance

Does not require medical exam but inquires about applicant's medical history and lifestyle. More expensive than medically underwritten policies. Insurer will average out everyone's risk and charge accordingly.

Variable Life Insurance Policies

Fixed premium but cash value and death benefits can fluctuate according to the performance Grows through mutual funds, stocks and bonds

Ordinary Life Insurance

Made up of several types of individual life insurance like term and whole. Not issued on weekly premium basis

Modified Endowment Contract (MEC)

Max amount of premium that can be paid into a policy

Single Premium Whole Life Insurance

Onetime lump sum payment is made Policy is completely paid up and will generate cash value immediately

Endowment Policy

Payment of the face amount at end of fixed period, specified age of the insured or at insured's death

Cash Value

Permanent Life insurance policy that accumulates over time and can be accessed while you're still alive

Whole Life Insurance

Permanent life insurance Provides death benefit for the entire life, ends at age 100 (as long as premium is paid) Premiums for whole life are usually higher

Equity Index Universal Life Insurance

Permanent life insurance policy that ties its accumulation to a stock market index

Joint Survivor or Last Survivor Life Policies

Policy is shared between two people. Saves on premium cost by averaging the age of the two insured Pays only after the death of the last insured

Joint Life Policy

Policy is shared between two people. Saves on premium cost by averaging the age of the two insured When one dies, the other receives the entire account and will not be insured

Universal Life Insurance Policy

Policy that gives the customer the most options and most control Options for flexible premiums and adjustable death benefits

Living Benefits

Policyowner can borrow against the cash value while the policy is in effect or can receive cash value when policy is surrendered

Adjustable Life Policy

Policyowner can make adjustments to premium Can control the amount and frequency of payments Death benefits can be adjusted as their life needs change

Graded

Premium increases yearly for a stated number of year After it remains the same for remainder of policy

Modified

Premium is consistent for first 5 years Premium increases in year 6 and stays same remainder of policy

Family Income Policies

Provides income beginning of when the insured dies and continues for a specific period of time Won't pay anything if you die after the term ends

Family Maintenance Policy

Provides monthly income from the day the insured dies to the end of a preselected period.

Credit Policies Insurance

Purchase up to the amount of debt or loan outstanding. Uses decreasing term life insurance. This policy matches with length of loan period

Convertible Term Insurance

Temporary coverage that can be changed into permanent (whole life) Premium for new whole life policy will be based on insured's current age

Annual Renewable Term

Term coverage that renews annually without proof

Decreasing Term Insurance

Used for amount of protection decreases over time (Ex. Mortgage protection) Death benefit that adjusts periodically and for specify time period. Death benefit will be $0 at the end of policy

Increasing Term Insurance

Used for amount of protection increasing over time Level premium and death benefit increases each year

Industrial Life Insurance

Very small premiums ($1000 or $2000) Premiums are paid weekly

Face amount plus cash value policy

When insured dies this contract promises to pay face amount plus a sum equal to policy's cash value

Investor (or stranger) originated life insurance policy S(I)OLI

When the insured dies, instead of the beneficiary benefitting the policyowner benefits. Purchase policy on life of someone else to profit on the person's death

Group Life Insurance

Written for members of a group like employment, association or a union. Coverage is provided to members of the group under one contract

Juvenile Insurance

Written on lives of children who are within specified age limits and under parent control