Types of Life Insurance
What is a survivorship policy?
Insured 2 or more, premium is based on joint average age, death benefit is payed upon last death.
Does Universal Life insurance have a minimum interest rate?
Yes
Does whole life insurance have cash value?
Yes
Flexible Premium Adjustable Life
insured may skip a payment as long as the cash value exceeds the premium
Single Premium Whole Life
involves a large one-time-only premium payment at the beginning of the policy period and from that point on the policy is completely paid for.
What is universal life insurance?
"Interest sensitive" whole life insurance. Has a stated interest rate that grows cash value, is reevaluated every year to determine if interest rate falls or rises.
What is adjustable life insurance?
- It is a combination of term and whole life where the mix is dictated by the face amount of insurance combined with the chosen premium. - The premium and face amount are adjustable at any monthly policy anniversary. - Policy can change from term to whole life or vice versa. Good idea for someone with fluctuations in income
Is a cash account a characteristic of a universal life insurance?
Cash account
Who bears the investment risk on a variable life policy?
Policy owner
What does level refer to In level term insurance?
Premium
Who regulates variable insurance?
SEC/FINRA
Level Term Insurance
Term insurance where the face value of policy remains the same from the date the policy is issued until the date the policy expires.
Increasing Term Insurance
Term life insurance in which the death benefit increases periodically over the policy's term. Usually purchased as a cost of living rider to a whole life policy. (See cost of living rider)
Does term life insurance have cash value?
No
Is there a minimum death benefit guaranteed in a variable product?
No
Annual Renewable Term
A Term Life Insurance contract which gives the policyowner the option to renew the policy each year without showing proof of insurability. Premiums increase at each renewal.
Limited Pay Whole Life
A variation of whole life insurance that charges a level annual premium and provides a level, guaranteed death benefit to the insured's age 100 and will endow for the face amount if the insured lives to age 100. Limited-pay life is designed so that the premiums for coverage will be completely paid-up well before age 100.
The policy owner of an adjustable life policy wants to increase the death benefit. What is correct regarding the change?
Death benefit can be increased only by exchanging the existing policy for a new one.
Variable Universal Life
Hybrid policy - features of variable and universal life. (Permanent insurance, matures at 100, death benefit, flexible premium)
What is a joint life policy?
Insured 2 or more, premium is based on joint average age and death benefit is payed upon first death
What is a family income policy?
Combination of decreasing term and whole life insurance. Provides a family with a monthly income upon the death of the insured while maintains permanent coverage until the end of income payments.
What is a family policy?
Combines whole life with term insurance to cover family members in a single policy, providing coverage on every member of a family.
Universal life Option B
Increasing death benefit, higher payment
Who bears the investment risk on a whole life policy?
Insurance comaony
What is whole life insurance?
It is sometimes called "Cash Value" life insurance and is considred to be permanent. It covers you until you die or until the policy reaches maturity, which is normally age 100. A Whole Life policy cannot be changed without the client's consent and it never has to be renewed, although the premium may be paid annually or even more frequently. Whole Life is said to have a relatively low net cost, since it does develop a cash value after the third year that belongs to the policyholder while living. However, upon death of the insured, the policy will pay the "face amount" (policy limit), but the company will keep the accumulated cash value.
Which of the following allows the insurer to relieve a minor insured from premium payments if the minors parents have died or become disabled?
Jumping Juvenile
Universal Life Option A
Level death benefit, lower payment
straight life insurance
Life insurance that requires the payment of premiums until the face value is reached or the insured is deceased; also called ordinary life or whole life
Variable Life insurance
Must have life and security license to sell. Always involves a separate account for mutual funds cash value determined by stock market
Do you need a SEC registration to sell variable life?
No
Term Life Insurance
simplest type of life insurance, provides insurance protection for a specified period and pays a benefit only if the insured dies during the period. Like renting your insurance but it's more affordable but as you get older it goes up.(No Equity)
Decreasing Term Insurance
term insurance in which the annual premium remains constant but the face amount of the policy declines each year