Life Insurance Policies

Group Life Insurance

Insurance written for members of a group, such as a place of employment, association, or a union. Coverage is provided to the members of that group under one master contract. The group is underwritten as a whole, not on each individual member. One of the benefits of group life coverage is usually there is no evidence of insurability required.

Decreasing Term

Life insurance that provides an annually decreasing face amount over time with level premiums. These policies are usually used for mortgage protection. A decreasing term policy is a type of life policy which has a death benefit that adjusts periodically (according to a schedule) and is written for a specific period of time. Decreasing term policies are usually written for a mortgage or other debt that typically decreases over time until it is paid off.

Family Maintenance Policy

Pays a monthly income from the date of death os the insure to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period.

Whole Life Insurance

Provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. It matures at age 100 and normally has a level premium. All whole life has the same type of benefits. The only difference in the types of whole life is how the policy is paid.

Renewable Term

Term insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.

Non-Medical Life Insurance

Typically does not require a medical exam and tends to be more expensive than medically underwritten policies. The insurer will average out everyone's risk and change accordingly. Although insurers typically will not require a medical exam, they will still inquire about the applicant's medical history and lifestyle.

Credit Policies

Typically purchased using a decreasing term life insurance policy, with the term matched to the length of the loan period and the decreasing insurance amount matched to the declining loan balance. Since credit life insurance is designed to cover the life of a dector and pay the amount due on a loan is the debtor dies before the loan is repaid, credit policies can only be purchased for up to the amount of the debt or loan outstanding.

Straight Life Insurace

With Whole Life- Premiums are payable throughout the insured's lifetime and coverage continues until the insured's death.

Limited Pay

With Whole Life- The coverage remains on a limited-pay life policy until age 100 or death, whichever happens first. Even though the premium payments are limited to a certain period, the insurance protection extends until the insured's death, or to age 100.

Endowment Policy

A contract providing for payment of the face amount at the end of a fixed period at a specified age of the insures, or at the insured's death before the end of the stated period.

Face Amount Plus Cash Value Policy

A contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value.

Level Term

A.K.A. Premium Level term, has a level face amount and level premiums. Premiums tend to be higher than annual renewable term because they are level throughout the policy period. However, the premiums will increase at each renewal. Life insurance written to cover a need for a specified period of time at the lowest premium is called level term insurance. Term insurance always expires at the end of the policy period.

Equity Index Universal Life Insurance (Equity Indexed Life)

Combines most of the features, benefits , and security of traditional life insurance with the potential of earned interest based on the upward movement of an equity index. Unlike a traditional whole life plan, this plan allows policy holders to link accumulation values to an outside equity index.

Joint Survivor or Last Survivor Life Policies

Cover the lives of two individuals and save on premium costs by averaging the ages of the two insured. Survivor policies only pay the death benefit upon the death of the last insured person.

Joint Life Policy

Covers the lives of two individuals and save on premium cost by averaging the ages of the two insured. Joint life policies pay the face amount after the first person covered on the policy dies.

Ordinary Life Insurance

Life insurance of commercial companies not issued on the weekly premium basis. It is made up of several types of individual life insurance, such as temporary (term), and permanent (whole)

Back-End Load

One assessed when a policy is surrendered

Adjustable Life Policy

Owner is usually looking for a policy offering flexible premiums. As financial needs and objectives change, the policy owner can make adjustments to the premium and/or face amount of an adjustable life insurance policy. Adjustable life policies are able to provide these features by combining whole life and term life into a single plan.

Family Income Policies

Pay an income beginning at the insured's death and continues for a period specified from the date of policy issue.

Investor (or stranger) Originated Life Insurance Policy (S(I)OLI)

When the insured dies, the policy owner (investor) benefits. In normal circumstances, it is a beneficiary with insurable interests who benefits from the death of an insured. An investor originated life insurance policy is when an investor purchases a policy on the life of someone else to profit upon that person's death.

Modified Endowment Contract (MEC)

With Whole Life- A policy that exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract. A MEC does not meet the 7-pay test and is considered over-funded, according to the IRS. For that reason, the policy will lose favourable tax treatment.

Juvenile Insurance

Written on the lives of children who are within specified age limits and generally under parental control

Industrial Life Insurance

Issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage

Increasing Term

Term Life insurance that provides increasing face amount over time based on specific amounts of a percentage of the original face amount

Cash Value

The equity amount or "savings" accumulation in a whole life policy

Variable Universal Whole Life (VUL)

The policy owner controls the investments of cash values and selects the timing and amount of premium payments. These policies give a policy owner the best of both variable life and universal life.

Modified

With Whole Life- A policy where the premium stays fixed for the first 5 years, and then increases in year 6 and stays level for the remainder of the policy.

Convertable Term

A provision that allows policy owners to convert their term insurance into permanent policies without showing proof of insurability. Convertible term provides temporary coverage that may be changed to permanent coverage without evidence of insurability.

Target Premium

A suggested premium used in universal life policies. It does not guarantee there will be adequate funds to maintain the policy to any time especially to life. It may give an indication fo what will be needed (under conservative estimates), to maintain the policy.

Term Rider

A type of life insurance. product which covers children under their parents policy. Family plan policies usually cover the family head with permanent insurance, and the coverage on the spouse and children is term insurance in the form of a rider. T term rider is alway level term. this is cheaper than every family member getting their own policy.

Term Life Insurance

Gives you the greatest amount of coverage for a limited period of time. Term insurance is only good for a limited period of time because is has a TERMination date. Term insurance is an inexpensive type of insurance, making it an attractive option for large policies. Term life is the cheapest type of pure life insurance, and due to having a termination date and not having any cash value, it will always be cheaper than a whole life policy with the same face value. It provides a pure death protection since it only pays a death benefit if the insured dies during the policy term.

Universal Life Insurance

Policy incorporates flexible premiums and an adjustable death benefit. The investment gains from a universal life policy usually go toward the cash value. the policy owner can use the cash value to manipulate the flexible aspects of a universal life insurance policy.

Variable Life Insurance

Policy requires a producer to have proper FINRA and national Association of Securities Dealers (NASD) securities registration prior to selling any variable policy contract, whether it be life insurance of an annuity, as they include regulated securities. These policies are also known as interest sensitive policies. These policies usually have a fixed level premium, but the cash value and death benefits of a variable life policy can fluctuate according to the performance of its underlying portfolio.

Annual Renewable Term

Term coverage that provides a level face amount that renews annually. This type of coverage is guaranteed renewable annually without proof of insurability.