Types of Life Insurance Policies

Universal Life option B has what kind of death benefit

Increasing death benefit

If the owner dies while the annuity is still in the accumulation period who gets the money?

The beneficiary will receive the greater of the money paid into the annuity or the cash value

What decreases in a Decreasing Term policy?

The death benefit the premium remains level

annuitant

person who receives benefits or payments from the annuity and whose life expectancy is taken into consideration

In a Variable Life insurance contract, who bears the investment risk?

policy owner

Straight Life whole life insurance

policy owner pays the premium from the time the policy is issued until the insured's death or age 100, whichever occurs first.

Limited Pay Whole Life

Designed so that premiums for coverage will be completely paid up well before age 100. examples: 20 pay life (coverage is paid up in 20 years) LP-65 - Life paid up at 65 (coverage paid up by age 65)

Annuity Period or Annuitization Period

Pay out period. The time during which the money that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant.

Accumulation period of an annuity

Period of time which the owner makes payments (premiums) into an annuity. The payments earn interest on a tax deferred basis.

Single Premium Whole Life (SPWL)

Provides a level death benefit to the insured for a one time lump sum payment. The policy is completely paid up after one premium.

Term life insurance is also know as?

Pure life insurance

SPIA stands for?

Single Premium Immediate Annuity

Which insurance provides pure death protection?

Term

What does endow mean?

The cash value created by the accumulation of premium is scheduled to equal the face amount (death benefit) of the policy at age 100.

What is the face value?

The death benefit

The policy owner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance

The basic function of an annuity is?

liquidating a principal sum

The purchaser of an annuity contract is called the

owner owner may be corporation or trust

The accumulation period of an annuity is also known as the?

pay in period

A convertible provision allows the policy owner to convert the policy to a ?

permanent insurance policy without evidence of insurability

Immediate Annuity

purchased with a single lump sum payment and provides income payments that start within one year from the date of purchase.

What is target premium in a Universal Life policy?

recommended amount that should be paid on a policy in order to cover the cost of insurance protection and keep the policy in force throughout its lifetime

To sell variable life insurance, agents must be:

registered with FINRA (Financial Industry Regulatory Authority Have a securities license Licensed by the state to sell life insurance

Survivorship life pays the death benefit on the?

second life, when the survivor dies.

Another name for survivorship life?

second to die

The assets in a Variable Life policy must be kept in a ?

separate account

An annuity can be funded in what 2 ways?

single payment or periodic payments

The three basic forms of whole life insurance are?

straight life whole life limited pay whole life singe premium whole life

Which life insurance provides the greatest amount of coverage for the lowest premium?

term insurance

Level term insurance means

the death benefit remains level and does not change throughout the life of the policy.

What is the cash value of term insurance

zero term insurance doesn't have cash value.

Whole life insurance endows at what age?

100

Universal Life has how many death benefit options?

2 A- Level death benefit. Think the A "bar" on A remains level B- increasing death benefit

A Universal Life policy has how many components?

2 An insurance component and a cash account

Deferred Annuities can be funded in how many ways?

2 Single lump sum (SPDA) Single Premium Deferred Annuity Periodic payments - Flexible Premium Deferred Annuities (FPDA)

A Universal Life policy has how many premium options?

2 minimum premium - amount needed to keep the policy in force for the current year. target premium- recommended amount

Is partial surrender from a Universal Life policy the same as a loan?

No

Can an annuitant be a corporation?

No, the annuitant must be a natural person whose life expectancy is taken into consideration for the annuity.

Key characteristics of whole life insurance

level premium, death benefit, cash value, living benefits

Universal life is also known as

flexible premium adjustable life

Deferred Annuity

An annuity in which the income payments begin sometime after one year from the date of purchase.

The insurance component of a Universal Life policy is always?

Annually renewable term insurance (ART)

A Universal Life policy is best described as?

Annually renewable term policy (ART) with a cash value account Think: Universal ART, art of the universe

When an annuity is written, whose life expectancy is taken into account?

Annuitant The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract.

Adjustable life

Can assume the form of either term insurance or permanent (whole life) insurance

Annually Renewable Term (ART)

Death benefit remains level. Premium increases annually according to the attained age

Which term is commonly purchased to insure the payment of debts or mortgages?

Decreasing Term Think D for debt

Which insurance is the cash value dependent upon the performance of the equity index, like the S &P 500?

Equity Indexed Whole life or Indexed whole life

Return of Premium life insurance is what type of insurance?

Increasing Term insurance. Return of premium is paid if the death occurs within a specified period of time or if the insured outlives the policy term.

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest may be taxed

The 3 types of basic term insurance?

Level Increasing Decreasing

Universal life option A has what kind of death benefit?

Level death benefit

Variable life insurance is based on what kind of premium?

Level fixed

A level premium term

Level premium and level death benefit

Is the cash value of a Universal Life insurance policy guaranteed?

No, it fluctuates with the performance of the portfolio in which the premiums have been invested.

Does a policy owner need to show evidence of insurability if they have a "renewable" provision?

No, they have the right to renew the coverage at the expiration date without evidence of insurability.

Which life policy allows for partial withdrawal or partial surrender of the cash value?

Universal Life

Which whole life policy has flexible premiums?

Universal Life

What life insurance policy has an IRS required corridor or GAP between the cash value and the death benefit

Universal Life- option A Think of the bottom of the A, there is a GAP Or think A fills the gap between G and P in the word gAp.

Which Universal life option allows the beneficiary to collect both the death benefit and the cash value upon the death of the insured?

Universal Life- option B

This permanent life insurance, the interest rates change every year?

Universal life

During the accumulation period in an annuity, do the payments earn interest?

Yes on a tax deferred basis

Is the premium always level throughout the term insurance?

Yes, only the amount of the death benefit may fluctuate

What is an annuity?

a contract that provides income for a specified period of years, or for life

In a joint life policy, the death benefit is paid upon the?

first death

What are the 3 types of annuities

fixed annuity (fixed payment amount) Indexed annuity( tied to index) Variable annuity (payment not guaranteed, premiums in separate account)