Ch. 3 Life Insurance Policies
What are the death benefit options in universal life policies?
-level premium -increasing DB
What are the 3 basic forms for Whole Life?
1. Straight 2. Single Premium 3. Limited Pay 4. others
The death protection component of Universal Life Insurance is always:
annually renewable term
Continuous Premium (Straight Life) Policy?
- Basic Whole life - Pays from issue date till insureds death - level premium - Cash value increases
All other factors being equal, the least expensive first-year premium is found in:
Annually Renewable Term
Juvenile Life
Any life insurance written on the life of a minor.
Which component increased in the increasing term insurance?
Death Benefit
A return of Premium term life policy is written as what type of term coverage?
Increasing
A return of premium term life policy is written as what type of term coverage?
Increasing term
A Straight Life policy has what type of premium?
Level
Level term Life Insurance
Level Death Benefit, Level Premium, most common
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited Pay Whole Life
What are the different options in Universal Life?
Option A: level death benefit Option B: increase death benefit
Who regulates Variable Life products
State and federal government, SEC, FINRA, & Insurance department
Universal Life
Term policy with cash value
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy inforce
Joint Life
Two or more insureds. Pays upon death of the first to die
Survivorship Life
Two or more insureds. Pays upon death of the last
Indexed Life
Whole life policy with a cash value is dependent upon performance of equity index.
Variable Life
level, fixed premium, investment based product
Renewable
policy can be renewed for additional periods without evidence of insurability
Securities
stocks and bonds
When would a 20-pay life policy endow?
when insured reaches age 100
Deferred
withheld or postponed until a specified time or event in the future
Characteristics of Group Life
- purpose of the group - Size of the group - Turn over of the group - Financial strength of the group
Limited Payment policy
- same as straight life but premium is paid up until a certain age.
What are the Flexible premium policies?
1. Adjustable 2. Universal
What is another name for "second-to-die" policy?
survivorship
Face Amount
the amount of benefit stated in the life insurance policy
Policy maturity
the time when the face value is paid out
Variable Universal Life
variable + universal
Increase Term Insurance
-Premium is level - Death Benefit Increases ( to handle inflation, or cost of living)
A domestic insurer issuing variable contracts must establish 1 or more:
separate accounts
Attained Age
the insured's age at the time the policy is issued or renewed
Decreasing Term Insurance
-Premium is level - Death Benefit decreases - Not renewable - Convertable
Annually Renewable Term
-Renews each year without proof of insurability -Premiums are level but increase @ renewals due to attained age
When will the insured be able to receive the full face amount from a whole life policy?
If insured lives to be age 100
What license must the agent have to sell Variable Life?
Securities and life insurance
Endow
to have the cash value of a whole life policy reach the contractual face amount
Convertible
policy that can be exchanged for another policy without showing insurability
Insurers are required to give the insured converting to an individual policy notice of their conversion privilege of how long?
15 days
Explain conversion to Individual policy
If insured leaves group - employee has a right to convert to an individual policy without proving insurable. 31 days after leaving group
Which Universal Life option has a gradually increasing cash value and a level death benefit
Option B (increasing DB)
Return of Premium
Policy refunds every penny of the premiums if one outlives the policy term
Most term insurance policies are ______________ and _____________.
Renewable and convertible
Which features of an adjustable life policy can be changed by owner?
- premium - face amount - period of protection
Characteristics of Whole Life Insurance
- Permanent - Cash value & other living benefits - effective for entire life till age 100 - Level premium forever - death Benefit
Characteristics of Term Life Insurance
- Temporary - a lot of coverage for lowest premium - max age where term cannot be offered/renewed - insured must die when policy is active - No cash value
3 Types of Term Life Insurance
1. Level, Increase, & Decrease (DB)
Adjustable Life
Permanent + Term Combines permanent and term life policies allowing changes to face amount, period payments, and term during policy lifetime.