life insurance policies

equity index universal life insurance

a permanent life insurance policy that. allows policyholders to tie accumulation values to a stock market index, like the S&P 500. indexed universal life insurance policies typically contain a minimum guaranteed fixed interest rate component along with the indexed account option. indexed policies give policyholders the security of fixed universal life insurance with the growth potential of a variable policy linked to indexed returns

joint life policy

a policy that covers two or more people. the age of the insureds are "averaged" and a single premium is charged. it uses permanent insurance (as opposed to term) and pays a death benefit when one of the insured dies. the survivors then have the option of purchasing an individual policy without evidence of insurability (ONE policy covers two. think "joint accounts" with a bank. one account, two people)

modified endowment contracts

a policy that is overfunded, according to IRS tables, is classified as this. policies that do not meet the 7-pay test are considered MECs and will lose favorable tax treatment. if withdrrawn prior to ago 59.5, a there is a 10% penalty; taxation only occurs when cash is distribution; funds withdrawn are subject to LIFO treatment

convertible term

a term life policy has a provision that allows policyowners to convert their term insurance into permanent policies without showing proof of insurability. it provides temporary coverage that may be changed to permanent coverage without evidence of insurability. the most important factor to consider when determining whether to convert term insurance at. the insured's attained age or the insured's original age is the premium cost

term rider

a type of life insurance product which covers children under their parent's policy. family plan policies usually coverr the family head with. permanent insuraace, and teh coverage on the spouse and children is term insuraance in the form of aa rider. this is aalways level term.

interest sensitive whole life

a type of whole life insurance where the cash value can increase beyond the stated guarantee if economic conditions warrant. this is also called current assumption whole life insurance. it also gives the insured the opportunity to either increaase the face amount or use the extra cash value to lower future premiums. premiums can vary to reflect the insurer's changing aassumptions with regard to its death, investment, and expense factors

survivorship policy

a variation of the joint life policy is this. it also covers two lives, but. the benefit is paid upon the death of the last surviving insured

universal life

a variation of whole life insurance, characterized by considerable flexibility. it allows its policy owners to determine the amount and frequency of premium payments which will adjust the policy face amount. cash value accumulations are subject to a minimum interest guarantee. any surrender charges of a universal policy must be disclosed

single premium whole life

allows the insured to pay the entire premium in one lump-sum and have coverage for the entire life. an immediate value is created, an immediate cash value is created, a large part of the premium is used to set. up the policy's reserve

level term

also called premium level term, it 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. this type if written to cover a need for a specified period of time at the lowest premium

adjustable life policies

are distinguished by their flexibility that comes from combining term and whole life insurance into a single plan. the policy owner determines how much face amount protection is needed and how much premium the policyowner wants to pay. allows you to vary your coverage as your needs change without requiring evidence of insurability

variable insurance products

because of the transfer of investment risk from the insurer to the policyowner, these products are considered securities contracts as well as insurance contracts. a producer is required to register with the national association of securities dealers to sell variable products

lower

compared to the combined premium for separate life insurance policies on two individuals, the premium for survivorship life policy is lower

pros of whole life insurance

covers the entire life of the insured, living benefits (cash value and policy loans), fixed premiums

variable whole life insurance

created to help offset the effects of inflation on death benefits. with these types of policies, the policy values are invested in the insurer's separate accounts which house common stock, bond, money market, and other securities investment options. the basic characteristics of this policy are: fixed premiums, a guaraanteed minimum death benefit which fluctuates over the minimum, and cash values which fluctuate and are not guaranteed

credit life insurance

designed to cover the life of the debtor and pay the amount due on a loan if the debtor dies before the loan is repaid. it is normally issued in an amount not to exceed the outstanding loan balance and is usually paid entirely by the borrower. a decreasing term policy is most often used

term life

gives the greatest amount of coverage for a limited period of time. it is only. good for a limited period of time because it has a TERMination date. it is an inexpensive type of insurace, making it an attraactive option for large policies. it is often renewable and covertible (think of it as renting)

industrial life

insurance issues very small face amounts, such as $1,000 or $2,000. premiums are paid weekly and collected by debt agents. they were designed for burial coverage

whole life

insurance that provides death benefits for the entire life of the insured. it also provides living benefits in the form of cash values and policy loans. it matures at age 100 and normally has a level premium

group life

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 this type of insurance is usually there is no evidence of insurability required

ordinary life

is made up of several types of individual life insurance, such as temporary (term) or permanent (whole)

juvenile insurance

life insurance which is written on the lives of a minor. the adult applicant is usually the premium payor as well, until the child comes of age and is able to take over the payments

modified whole life

low premiums in the early years and jumps to a higher premium in the later years and remains fixed thereafter. premiums increase just once

multiple protection policies

pays a benefit of double or triple the face amount if death occurs during a specific period. if death occurs after the period has expired, only the policy face amount is paud

cons of whole life insurance

protection is more expensive because of living benefits, premium paying period may extend beyond the income-earning years

types of whole life insurance

straight whole life, limited pay whole life, single premium whole life, modified whole life, graded whole life

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

renewable term

term insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to provide insurability. it provides temporary level coverage at the lowest possible cost for a limited period of time, but then allows the policyowner to renew the policy to maintain coverage past the policy's termination. when a term policy is renewed, the insured does not have to prove insurabaility

decreasing term

term life insurance that provides an annually decreasing face amount over time with level premium. these policies are usually used for mortgage protection. it 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. as the mortgage balance reduces each year, the face value of the insurance policy will adjust accordingly to match

increasing term

term life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount

family plan policies

these are designed to insure all family members under one policy. usually the family head is covered by permanent (whole life) insurance and the spouse/children are included on the same policy as level term life riders (family term riders)

straight life

this is basic whole life insurance with a level face amount and fixed premiums payable over the insured's entire life. premium payments made until death of insured or age 100

limited pay life

this is whole life insurance where the insured is covered for his entire life, but premiums are paid for a limited time. as the premium payment period shortens, cash values increase faster and the fixed premiums are higher

payor provision

typically attached to juvenile policies. it provides that, in the event of death or disability of the adult premium payor, the premiums will be waived until the child reaches a specified age (payor provision protects the insured in the event the PAYOR dies or is disabled)

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 this type is designed to cover the. life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid, it can only be purchased for up to amount of the debt or loan outstanding

graded whole life

under a typical graded premium life insurance policy, the premium increases yearly for a stated number of years, then remains level. premiums continue to stay level for the remainder of the policy

family income policies

whole life and decreasing term insurance (begins date of purchase). provides monthly income to a beneficiary if death occurs during a specified period after date of purchase. if the insured dies after the specified period, only the face value is paid to the beneficiary since the decreasing term insurance expired. (income this concern typically DECREASES over time because the household shrinks)

family maintenance policy

whole life and level term (begins date of death). provides income to a beneficiary for a selected period of time if an insured dies during that period. at the end of the income, the beneficiary also receives the entire face amount of the policy. if an insured dies after the end of the selected period, the beneficiary receives only the face value of the policy (maintenance "maintains" the family using level term. this means the family will receive a benefit for so many years after the insured's death)