Chapter 13

With decreasing term insurance

A relatively high level of insurance is provided in the earlier years when it is most needed

Term insurance

Does not grow in cash value

One element that must be considered in making this calculation according to the budget method is​ the

Special future expenses

The disadvantage of this method is that it does not consider​ your

age or your household situation.

Life insurance

allows individuals to eliminate or substantially reduce the financial consequences of their deaths on dependents.

The loan clause

allows the policyholder to borrow at a lower rate than that offered by financial institutions.

Settlement options​ represent

alternate ways in which a beneficiary can receive life insurance benefits in the event the insured person dies

The installment settlement option provides the beneficiary​ with

an equal stream of payments over a specified number of years.

The income method of determining the amount of life insurance needed specifies the life insurance​ amount

as a multiple of the​ insured's annual income.

Purchasing term insurance with benefits large enough to pay off the mortgage is often ? than purchasing mortgage life insurance

cheaper

Life insurance needs should be based on a​ family's

current standard of living and include some improvement in the future standard of living

The budget method to determine the amount of life insurance needed is based on a​ household's

future expected expenses and the​ individuals' current financial situation

Universal life​ insurance

has a saving component like whole life insurance

A term insurance​ policy

has increasing premiums are you get older

The factors that determine the premium for term insurance includes

health

Under the interest payments​ option, the amount owed to the beneficiary will​ be

held by the life insurance company for a specified number of years

Variable life​ insurance

is related to universal life insurance

Universal life insurance differs from whole life insurance in​ that:

it allows policyholders to skip premium payments and have the amount withdrawn from their saving plan

Whole life​ insurance

it is also called cash value life insurance

Does anyone need life insurance?

no, because only does with dependents need life insurance

An advantage of variable life policies is​ that

policyholders have flexibility in making their own investments.

An alternative approach to purchasing whole life insurance is​ to

purchase term life insurance and invest the premium difference in other investments.

Individuals avoid the high fees of variable life insurance​ by

purchasing​ lower-cost term insurance and investing the cost difference

Mortgage life insurance is​ a

special form of decreasing term life insurance that pays off the mortgage if the insured dies.

An insured individual would choose this option when they​ anticipate

the beneficiary might quickly spend the total amount to be received

The settlement option should be selected with an understanding of

the needs and characteristics of the beneficiary

The premium paid for a whole life policy is higher than the premium for term life​ because

whole life insurance provides both insurance protection and savings.