Life Insurance Polices

joint life

* Premium is based on the joint average age of the insured * Death benefit upon the first death only

pure death protection

- if the insured dies during this term, the policy pays the death benefit to the beneficiary - if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term - there is no cash value or other living benefits

permanent life insurance

A general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid.

survivorship life

A life insurance contract which pays policy proceeds only upon the death of the last of two or more insureds covered by a combination plan, costs lower since longer time paying premiums, used to offset liability of estate tax

single premium whole life (SPWL)

Designed to provide a level death benefit to the insured's age 100 for a one-time, lump-sum payment. The policy is completely paid-up after one premium and generates immediate cash.

convertible provision

Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability

level term insurance

The most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy.

annually renewable term is

a form of level term insurance that offers the most insurance at the lowest cost

variable life insurance

a level, fixed premium investment-based product. Guaranteed minimum death benefit Cash value is not guaranteed and fluctuates with the performance of the portfolio in which premiums have been invested by insurer, owner takes the risk

renewable provision

allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability

in order to sell a variable product, what credentials do you need?

be registered with FINRA, have a securities license, be licensed by the state

Nonforfeiture Values

benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

Fixed (Equity) Indexed Life

cash value is dependent upon the performance of the equity index such as S & P, does have a guaranteed minimum interest rate

Variable life insurance products

contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

Fixed life insurance products

contracts that offer guaranteed minimum or fixed benefits

Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type?

death benefit

increasing coverage

death benefit starts at 0 and increases each year, RIDER not a policy

Conversion Privilege for group plans

employee has the right to convert to an individual policy without proving insurability, can convert to any form of insurance except term insurance. 31 period after terminated to exercise the conversion option

level coverage

fixed death benefit for period

Universal life (flexible premium adjustable life)

has the flexibility to increase the amount of premium paid into the policy and then decrease it again. can even skip a premium as long as enough is in cash value

option B universal life

increasing death benefit

universal life policy has two components

insurance component and a cash account

the insurance component of a universal life policy

is always annually renewable term insurance

Option A Universal Life

level death benefit option, more common

key characteristics of whole life insurance

level premium, death benefit remains level, cash value, living benefits

three basic types of term coverage available

level, increasing, decreasing

with term insurance, what fluctuates?

only the death benefit, NOT the premiums

continuous premium/ straight whole life insurance

policy owner pays the premium from the time the policy is issued until the insured's death or age 100, lowest annual premium

limited payment insurance

premiums for coverage will be completely paid off well before age 100, annual premium will be higher. cash value builds up faster for this policy

level premium term insurance

provides a level death benefit and level premium during the policy term, if renewing at the end of term the premium with then be bases on the insured attained age

whole life insurance

provides lifetime protection, and includes a savings element (or cash value), premiums are usually higher than term

annual renewable term

purest form of term insurance. death benefit remains level and policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually to the attained age

characteristics of group plans

purpose of group, size, turnover, financial strength

target premium

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

If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?

require evidence of insurability

where are the assets of a variable life insurance policy held?

separate account

decreasing coverage

starts at a specific amount and decreases each year, ends at 0, decreasing obligation like a mortgage, goes with credit life insurance

term insurance / pure life insurance

temporary protection because it only provides coverage for a specific period of time, greatest amount of coverage for the lowest premium

the minimum premium

the amount needed to keep the policy in force for the current year. Paying the minimum premium will make the policy perform as an annually renewable term product.

face amount

the amount of benefit stated in the life insurance policy

level premium

the premium that does not change throughout the life of a policy

endow

to have the cash value of a whole life policy reach the contractual face amount