Types of Insurance Policies
Give examples of 3 types of combination plans?
*Insured must die within rider term in order for income benefits to be paid 1. Family income plan: Whole life w/DECREASING term rider -A monthly income benefit is paid to beneficiary until what would have been the end of the rider term 2.Family Maintenance plan: Whole life with a level term rider income benefit is paid to beneficiary for a period EQUAL to the term of the rider -A level 3. Family Life Insurance plan: provides life insurance on everyone in HH but is a Whole life policy on the primary insured (spouse w/most income) -Provides term life rider for other spouse in a lower face amount that terminates once primary insured turns 65 or if primary insured dies before hand, the rider is paid up til they would have turned 65 -provides automatic term insurance on each child, with the premium based on face amount chosen, no additional premium per child, no health questions, if child born after policy issued they are automatically covered at 15 days.
What are other examples stock market (equity) sensitive plans?
-Variable whole life -Equity-indexed life -variable universal life
Who would like a variable life insurance plan?
-someone committed to a program long-term -tolerant of risk and short term reductions
What kind of Term plans can be renewable up to a specified age and does there need to be evidence of insurability? Will their premium go up at the time of renewal?
1 and 5 yr plans (10 yr and longer cannot be renewed) with no evidence of insurability, and their premium rate will go up for their age at the time of renewal
What are 3 kinds of Whole life insurance policies? What do they have in common?
1. Whole life 2. Modified Whole life 3.Limited Pay Whole life -Provide a level amount of life ins. coverage until age 100 -They all have complimenting levels of cash value and pure insurance protection -all mature (cash value equal to face amount) at age 100
What are other names for an Endowment and what makes it different than SLI, MWL, LPWL, AND AdjL?
20 yr Endowment or Endowment at age 65. Difference is that it matures prior to age 100. *highest premium
Variable life insurance is what type of life insurance? What makes it different? And what is its purpose?
A stock market (equity) sensitive plan. Which means that the death benefit and cash value growth rate vary on the performance of the specified securities managed by the ins. co. or a security of market index or another economic index. It's purpose is to keep insured equal to or ahead of annual increase cost of living (inflation)
What must a person have to sell variable life insurance?
Both life insurance and a security Representative license
Where must life ins. cos. keep their variable life ins. premiums and cash value investments?
In a separate (segregated) fund
Universal Life insurance is what type of life insurance? What makes it different?
It is interest sensitive for its cash values which vary from year to year but is guaranteed not to drop below a minimum guaranteed amount. The difference is that premiums are based on mortality cost, but they can pay either an equal amount or exceeding amount of mortality cost. Those exceeding are applied to cash value. *to sell this insurance a person is required to have ONLY a life insurance producer license
What are other names for a Modified Whole life? What makes it different than SLI (WLI, OLI) and LPWL?
Modified 3 or Modified 5, sometimes Graded Premium Whole life. The premiums is reduced for an initial period then is level thereafter. *Lowest initial premium rate
Do term policies have cash value?
No bc it only provides a level amount of life insurance protection for a specified period of time
Do term policies have forfeiture options?
No bc there is no cash value
Is there health questions when converting a term to permanent life insurance?
No, but the premium will go up based on age
What is he jumping Juvenile Provision?
Part of the family life insurance plan, this means that coverage terminates or is convertible up to 5 times the face amount either at the primary insureds age 65 or childs age 25, whichever comes first. The childs coverage is paid up until the childs age 25 at either the spouse or primary insureds death
Cash Value plans are used and most economical for what kind of needs? Use examples
Permanent-long term needs -Funeral expenses
What is a decreasing Term policy? Is it renewable?
Provides DECREASING amount of life insurance protection for a specified PERIOD of time. Usually not renewable
What is adjustable life insurance? What makes it different than SLI, MWLI, LPWL?
Provides flexibility in premium amount, face amount, and cash value accumulation. Face amount can be increased or decreased within limitations in policy. -Premium can be increased or decreased as long as it equals or exceeds minimum amount stated in policy. Only premiums exceeding minimum amount are credited to cash values. *Best for those needing flexibility
What are other names for Limited Pay Whole Life? What makes it different than MWL, SLI (WLI, OLI)?
Single premium Life ( 1 premium)/20 pay life (20 premiums)/ Life paid up at age 55 (paid off at 55 but not matured)/ Life paid up at age 65 (paid off by 65 but not matured) It has a level premium rate for a shortened premium payment period *Highest premium and faster cash value increase but not more than endowment
What are other names for Whole Life? And what makes it different from MWL and LPWL?
Straight life, Ordinary life. Difference is Premiums stay at the same level during the life of policy
Term insurance is used and most economical for what kind of needs? Use examples
Temporary-short term needs -mortgage -car loan
What offsets the increasing cost as the insured grows and mortality rates increase, of the decreasing amount of pure insurance in a policy?
The interest and earnings earned off the cash values
Are variable life premiums fixed?
Usually but vary
What is Credit line and mortgage life insurance?
decreasing term life insurance set up so that the benefits AUTOMATICALLY be applied to pay off the unpaid loan balance at insureds death
