Types of Policies

Industrial life Provisions

"A 31-day grace period (28 days for weekly premium policies) is provided. The application is not required to be part of the policy. Medical examinations are not required. Cash values do not accumulate sufficiently to provide loans. Settlement options do not apply because of limited cash value. Suicide provisions are not included in the policy because of the small benefit amount. Nonforfeiture provisions do not allow the cash option until premiums have been paid for five years (compared with three years for ordinary policies). Dividends are used to reduce the premium payment or to purchase paidup additions

Universal Life

"Adjustable death benefit or Premiums. One year renewable term. Cash value grows against interest rates.

How does Adjustable Life Work?

"Allows for conversion from one form to another and making any necessary premium adjustments necessary. Proof of insurability may be required if death benefit increases

Necessary Viatical disclosures

"Alternatives to sale (accelerated benefits) Transaction may have tax implications Transaction may affect creditors rights may limit future purchase of life insurance date funds will be available owner must disclose medial can financial information insured will be contacted for health status update affiliation between broker and provider

Credit Life Insurance

"Associated with a loan or debt decreasing term aligned with the debt

What characterizes different types of Term Insurance

"Changes in the face amount (death benefit) Renewability Convertability

Variable Universal Life

"Combination of variable and universal. includes equity investments for growth. allows for adjustments to death benefit or premium.

Convertible Term

"Convert or exchange term to some type of permanent insurance w/out proof of insurability Premium based on attained age Conversion must be prior to expiration of term

Level Term

"Fixed period or until specific age. Premiums are level and face goes down, or face stays level and premium goes up.

Viatical Provider disclosures

"Gross policy purchase price. amount paid to owner. broker compensation. broker contact information.

Renewable Term Insurance

"Issued for specific term and renewable w/out proof of insurability Premiums on renew reflect attained age

Whole life characteristics

"Level Premium. Level Face Amount. Guaranteed cash value. Surrender for current cash value, non-forfeiture = cash always belongs to owner. Indebtedness - cash value decreased by w/draw or loan amounts

Endowments

"Pays the beneficiary on death or the policy holder at the end of a specified period, paid to owner in lump sum or installments. Premium payments are typically higher because of the shorter period.

Characteristics of Universal Life

"Premiums separated and paid towards 1) insurance coverage 2) loading cost and to build cash value. Death Benefit can be increased subject to insurability requirements, or decreased. Offers guaranteed minimum interest

Term Insurance

"Provides temporary insurance protection for defined period or to specific age Pays DB only if insured dies during coverage Does not accumulate cash value

Endowment life insurance

"Pure endowment plus term term covers death before endowment period maturity endowment pays income

Interim Term

"Written to cover period before a permanent policy goes into effect - automatically convertible Premium based upon age

broker disclosures

"description of all offers. affiliation with person making the offer. estimate of life expectancy of insured.

Characteristics of Variable Life

"guaranteed minimum death benefit - the actual may be higher depending on performance of the investments. Cash value not guaranteed. Regulated as security . General account protects death benefit. Separate account invested. Premiums are fixed and payable over the life of the policy.

Industrial

"small face amount (2K) frequent premium collection typically at workplace no medical required all family members covered to 65 or 70

Family Protection Policies

"whole life on the breadwinner and convertible term on the spouse and (all) children term insurance on children expires at age 18 or 21

Option 2 / B

An increasing death benefit. Death benefit equal to the policy's face amount plus the cash account. In terms of policy structure, this contract is more like a combination of level term insurance and increasing cash value than whole life insurance

Re-entry Term

At the end of the term period allows, with proof of insurability, to get lower rate

Variable life

Cash value backed by equity investments and securities and is not guaranteed

Equity Indexed Universal Life

Face value tied to index such as the S&P 500. Adjustable premium and death benefit. Capture value for increased DB by a) increasing the premium OR b) something about inflation assumptions and charging higher premium from initial inception date

Non-renewable term insurance

Issued for a specific term and may not be renewed

Decreasing Term

Issued for an initial face amount that declines during the term period and reaches zero at policy expiration - sometimes associated with debt

Option 1 / A

Level Death Benefit with decreasing coverage. As the policy's cash value increases, net death protection actually decreases over the life of the policy, making the policy structure similar to a whole life contract

deposit term insurance

Level Term Insurance with higher first premium - the balance of which is used to decrease subsequent periods

Universal Life loans / partial surrender

Loan's decrease the death benefit by amount still owed as well as interest. Partial surrender not treated as loan, not subject to interest payments. If surrender is repaid it is treated as a premium

Retirement endowment

Matured at 65 and, if living paid owner the amount of the face in form of monthly installment

Increasing Term

Not common - the coverage increases every year sold as a rider on another policy to provide additional coverage

Credit Life Provision

Number of insureds must maintain specified level (100) - lower participation insurer may not add new debtors No conversion privilege

Family Maintenance Policies

Ordinary life with level term payment and designed to provide income for a specific period 5, 10, or 20 years. OR until age 65

Preneed funeral

Pays for funeral costs

Limited Pay Whole Life

Policy holder pays premiums for a fixed period of time but has coverage for life time. terms are typically 20 years 30 years or paid up at 65. The shorter the pay period the higher the premium - matures at death or 100 yrs of age

Viatical Settlement

Policy owner (terminally ill) sells policy to 3rd party

Graded Premium whole life details

Premiums for a graded premium contract increase each year during the early years of the contract, usually for five years. After remain constant . The initial premium charged is usually lower than the equivalent level premium for a straight life policy at the same age of issue.

Premiums for modified whole life

Premiums for modified whole life policies do not increase annually after the first few years. They level off after the premium period.

Pure endowment

Provides payment of face amount only if insured lived to maturity date, else all benefits forfeited

Continuous Premium / Straight Whole Life

Stretch the premium payments over the whole life of the insured

Single Premium whole life

a single lump sum premium payment - payment plus interest covers the premiums for life. - Has immediate cash value

" Retirement Income policy

accumulates sum of money for retirement while also providing a death benefit paying X dollars for Y dollars of coverage

Types of Flexible Cash Value Policies

adjustable life. universal life. variable life

Current Assumption Whole Life

also called interest sensitive whole life, premiums tied to interest rates. Lower the rate the higher the premium payment. Higher the rate the lower the premium payment. Premium's are adjusted annually. Rate of return is not fixed

Modified Whole life

basically a term policy that converts automatically into a whole life policy. Premiums are lower in early years, 3 to 5 act like term. Higher thereafter acting like whole. A ONE time increase in premium

Minimum deposit

basically paying high cash values that will then in turn pay for the policy premiums - some regulations that require that 4 of the 7 first annual premium payments are made NOT from loans

Multiple Protection

combination of whole and term where protection is higher in early years - the early protection is term insurance

Mortgage redemption

decreasing term connected to mortgage

Juvenile endowments

designed to mature at specific age and help fund college education

Indexed Linked Policies

designed to protect against high inflationary periods - premium is increased to cover the increasing face value

Graded Premium Plan

gradually increasing premium first five years of contract then stays level

Juvenile jumping

increases in in face at a given age (21) - premium remains level

Adjustable Life Insurance

option to adjust the face amount - premium - type of protection - and/or length of protection, without having to complete a new application or actually exchange policies

Home Service Life Insurance

small amount with automatically debited premiums

Economatic

whole life with a decreasing term rider and uses dividends to purchase more paid up insurance. The face value is consistent the term constantly is converted to permeant coverage

Family Income

whole life with decreasing term - pay survivors an income for specified period from purchase date

Joint Life Policies

written on two lives with insured amount payable on death of first or Survivorship which pays benefit on death of last surviving insured.