Types of life policies
Whole life insurance
Provides lifetime protection (permanent) and accumulates cash value
What are the characteristics of term life insurance
Provides temporary, pure death protection, with no cash value. *provides the greatest amount of coverage for the lowest premium*
convertible
Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability
General characteristics
Pure protection Last for specific terms No cash value
Target premium
Recommend amount that should be paid in order to cover the cost of insurance protection
Features of term policy
Renewable Convertible
Decreasing Term
A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy.
Minimum premium
Amount needed to keep the policy, this will make the policy perform as an annually renewable term product
What is annually renewable term insurance?
Annually renewable term (ART) is the purest form of term insurance in which the death benefit remains level; the policy may be guaranteed renewable each year without proof of insurability, but the premium increases annually according to the attained age
Annuities parties
Annuitant - insured Beneficiary - will receive any amount contributed to annuity Owner -has all rights to policy
Straight life also know as (ordinary life or continuous premium whole life)
Basic whole life policy. The policyowner pays the premium from the time the policy is issued until death or age 100( lowest annual premium)
Adjustable life
Can assume the form of either term insurance or permanent. The insured typically determines how much coverage is needed and the affordable amount of premium, then the insurer will determine the appropriate type of insurance to meet the insured needs
Variable life
Fixed premium minimum death benefit Cash value and death benefit not guaranteed Assets in Separate accounts Agents must be dually licensed in insurance and in securities
What two components does a universal life policy has
Insurance component and cash account, this will always be annually renewable term insurance
3 basic types of coverage
Level Increasing Decreasing
Level premium term
Level death benefits and level premium
The key characteristics of whole life insurance are ?
Level premium-premium based on the issue age (remains the same throughout policy) Death benefit-guaranteed remains level for life Cash value-scheduled to equal the face amount of the policy when insured reaches age 100(policy maturity date) Living benefits- policyowner can borrow against the cash value while the policy is in effect.
Return of premium ROP
Life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid. The return of premium is paid if the death occurs within a specified period of time or if the insured outlives the policy term.
What happens if an insured skips a premium payment on a universal life policy
Missing premium may be deducted from the policy's cash value the policy will not lapse
Universal life (flexible premium adjustable life)
Policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again
Limited pay life and single premium life
Premiums for coverage will he completely paid up well before 100
Traditional whole life products What is permanent
Used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured
Single premium
Premiums paid in one lump sum coverage continues to age 100
Limited payment
Premiums paid until certain time coverage I'm effect until age of 100
Annually renewable term
Renews each year without proof of insurability Premiums increase due to attained age
Annuities phases
Accumulation (pay in) payments made into the annuity Annuitization (pay out) payments made to the annuitant from the annuity
renewable insurance policy
Allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability.
What does level term insurance refer to
Death benefit (this will not change)
Single premium whole life (spell)
Designed to provide a level death benefit to the insured age 100 for a 1 time lump sum payment.
Types of annuities
Fixed- guaranteed Variable- not guaranteed Indexed - interest rate tied to an index
Combination plans
Joint life Premium is based on the joint average age of the insured Death benefit upon the first death only Survivorship. _premium is based on the joint average age of the insured Death benefit upon the last death
Flexible premium general characteristics
Types of whole life insurance Flexible premium