Insurance Chapter 11

single-premium whole life insurance

EXTREME form of limited-payment life policy, you pay a one premium and you're done

cash-surrender value

amount payable to the owner of a cash-value life insurance policy if he or she decides the insurance is no longer wanted. calculated separately from the legal reserve.

renewable

can be renewed for additional periods without evidence of insurability. purpose is to protect the insurability of the insurance

whole life insurance

cash-value policy that provide lifetime protection (same as ordinary life insurance)

premature death

death of a family member with outstanding unfulfilled financial obligations, such as dependents to support, children to educate and a mortgage to pay off

variable life insurance

fixed-premium policy in which the death benefit and cash values vary according the the investment experience of a separate account maintained by the insurer

universal life insurance

flexible premium policy that provides protection under a contract that unbundles the protection and savings components

human life value

for purpose's of life insurance, the present value of the family's share of the deceased bread winner's future earnings

variable universal insurance

has component of flexible premiums but is also invested

ordinary life insurance

level-premium policy that provides cash values and lifetime protection to age 121 (if they live that long, the face amount of insurance would be paid at that time)

legal reserve

liability item on a life insurer's balance sheet representing the redundant or excessive premiums paid under the level-premium method during the early years. Assets must be accumulated to offset the legal reserve liability. Purpose is to provide lifetime protection

group life insurance

life insurance provided on a number of persons in a single master contract. physical examinations are not required and certificates of insurance are issued to members of the group as evidence of insurance

cash-value life insurance

life insurance with a savings component that builds cash values

term insurance

provides temporary protection for a specified number of years with no savings element. It is usually renewable and convertible

convertible

the term policy can be exchanged for a cash-value policy without evidence of insurability

limited payment policy

type of whole life, permanent and the insured has lifetime protection and has relatively high premiums that are paid only for a limited period