Types of Life insurance

Variable Life

- Fixed premium, minimum death benefit - Cash value and the actual amount of death benefit are not guaranteed - Assets in separate accounts - Agents must be dually licensed in insurance and insecurities

Features of Term Policies

- renewable: renew the policy without evidence of insurability - convertible: right to convert a term policy to a permanent policy without evidence of insurability

Ordinary Whole Life (Continuous Premium) ( Straight Life)

-Basic Policy -Level death benefit -Insured pays premiums for life or until age 100

whole life insurance

-Permanent protection -Guaranteed elements (face amount, premium, and cash value) until death or age 100 -Level premium -Cash value and other living benefit

Annually Renewable Term

-Renews each year without proof of insurability -Premiums increase due to attained age

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.

Annuities (Phase)

Accumulation (pay-in) - payments made into the annuity Annuitization (pay-out) - payments made to the annuitant from the annuity

Adjustable Life Insurance

An adjustable life policy can assume the form of either term insurance or permanent insurance. The insured typically determines how much coverage is needed and the affordable amount of premium. The insurer will then determine the appropriate type of insurance to meet the insured's needs. Policy holder has the option: - Increase or decrease the premium or the premium paying period; - Increase or decrease the face amount; or - Change the period of protection.

Universal Life Insurance

An insurance component in the form of annually renewable term 2 death benefit options: Option A - level death benefit, and Option B - increasing death benefit Can make partial surrender/cash withdrawal

Annuities (Parties)

Annuitant - insured (must be a natural person); annuity issued on annuitant's life Beneficiary - will receive any amount contributed to annuity (plus any gain) if annuitant dies during accumulation period Owner - has all rights to policy (usually annuitant); can be corporation or trust

Return of Premium ( Term)

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.

Level Premium Term

provides a level death benefit and a level premium during the policy term

Types of Annuities

Fixed annuities - guaranteed, fixed payment amount; premiums in general account Variable annuities - payment not guaranteed; premiums in separate account, and invested in stocks and bonds Indexed annuities - interest rate tied to an index; earn higher rate than fixed annuities, not as risky as variable annuities or mutual funds

Income Payments (Annuities)

Immediate - purchased with a single premium; income payments start within 12 months from the date of purchase Deferred - purchased with either lump sum or periodic payments; benefits start sometime after 1 year from the date of purchase

Combination Plans

Joint Life: - Premium is based on the joint average age of the insured - Death benefit upon the first death only Survivorship Life: - Premium is based on the joint average age of the insured - Death benefit upon the last death

Payout Options ( Annuities)

Lump Sum -received at annuitization Life Only (Straight Life) -payments for the rest of annuitant's life; pays highest monthly amount Refund Life Annuity -guaranteed lifetime income; upon annuitant's death, balance is "refunded" to beneficiary in cash or in installments Joint Life -2 or more annuitants receive payments until first death, then payments cease Joint and Survivor -income for 2 or more that cannot be outlived; often used with period certain Annuities Certain -payment guaranteed for fixed period or until certain fixed amount paid; no life contingencies

Single Premium Whole Life

Premiums paid in one lump sum; coverage continues to age 100

Limited Payment (whole life)

Premiums paid until a certain time; coverage in effect to age 100

Premium Payments (Annuities)

Single premium - ONE lump-sum payment; the principal is created immediately (both immediate and deferred annuities) Periodic (Flexible) premium - multiple payments; the principal is created over time (used for deferred annuity only)