Life Insurance Policies
Conversion to Individual Policy
another characteristic of group insurance is the conversion privilege. If an employee terminates membership, they have the right to convert to an individual policy without proving insurability. Usually the employee has 31 days to convert after terminating.
Basic Forms of Whole Life
are straight whole life, limited-pay whole life, and single premium whole life.
Adjustable Life
can assume the form of either term or permanent insurance. The insured typically determines how much coverage is needed and the affordable amount of premium. As needs change, the policy owner can make adjustments to the policy. Can also be converted from term to whole life or vice versa.
Increasing Term
features level premiums and a death benefit that increases each year over the duration of the policy term.
Contract Interest Rate
guaranteed by the insurer, usually 3 to 6%
Level Premium Term
level premium term as the name implies provides a level death benefit and a level premium during the policy term. Premium is averaged over the term of the policy.
Whole Life Insurance
provides lifetime protection, and includes a savings element (or cash value). At age 100 the cash value created by the accumulation of the premiums equals the face amount of the policy.
Fixed Equity Indexed Life
the main feature this insurance policy is that the cash value is dependent upon the performance of the equity index, such as S&P 500. The premium is fixed and the death benefit guaranteed.
Annually Renewable Term
ART - is the purest form of term insurance. The death benefit remains the same, policy is guaranteed renewable each year, but the premium increase annually according to the attained age.
Renewable Provision
allows the policy owner the right to renew that coverage at the expiration date without evidence of insurability. The premium for the new term policy will be based on the insured's current age.
UL Policy Components
has two components, an insurance component and a cash account. Insurance component is always annually renewable term insurance.
Universal Life
implies that the policy owner has the flexibility to increase the amount of premium going paid into the policy and to later decrease it again.
Permanent Life Insurance
is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured or until age 100 as long as the premium is paid.
Limited-Pay Whole Life
is designed so that the premiums for coverage will be completely paid-up well before age 100. Shorter period of time equates to higher premiums.
Single Premium Whole Life
is designed to provide a level death benefit to the insured's age 100 for a one-time lump-sum payment. It generates immediate cash.
UL Minimum Premium
is the amount needed to keep the policy in force for the current year.
UL Death Benefit Option A
level death benefit option, the death benefit remains level while the cash value gradually increases, thereby lowering the pure insurance with the insurer in the later years.
Variable Life
variable life insurance or annuities are contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance. Variable annuities keep pace with inflation, and are determined by the value of securities backing it.
Survivorship Life
referred to as "second to die" or "last survivor", is much the same as joint life, premium is based on a joint age, however the death benefit is paid on the last death. This policy is used to offset the liability of the estate tax upon the death of the last insured.
Characteristics of Group Plans
Purpose, Size, Turnover & Financial Strength of the group. Another unique aspect of group underwriting is that the cost of the coverage is based on the average age of the group and the ratio of men to women.
Group Life Insurance Requirements
written as annually renewable insurance. Evidence of insurability is usually not required, participants under the plan do not receive a policy, they receive a certificate of insurance, the master policy/contract is issued to the sponsor.
Types of Plan Sponsors
GLI plans may be sponsored by employers, debtor groups, labor unions, credit unions, associations and other organizations formed for a reason other than purchasing insurance.
Whole Life Characteristics
Level Premium, Death Benefit, Cash Value, Living Benefits (can borrow against the cash value while the policy is in effect)
UL Target Premium
is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and keep the policy in force throughout its lifetime.
Group Life Insurance
is issued to the sponsoring organization and covers the lives of more than one individual member of that group, usually written for employee-employer groups.
Special Features
most term insurance policies are renewable, convertible, or renewable and convertible (R&C)
Current Interest Rate
not guaranteed in the contract, but may be higher because of current market conditions.
UL Death Benefit Option B
increasing death benefit option, the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.
Variable Product Regulations
variable life insurance products are dually regulated by the State and Federal Government. The federal government declared that variable contracts are securities and are regulated by the SEC and FINRA. Agents selling variable life, must be registered with FINRA and have a securities license.
Convertible Provision
provides the policy owner with the right to convert the policy to a permanent insurance policy without evidence of insurability.
Level Term Insurance
level term insurance is the most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy.
Decreasing Term
policies feature a level premium and a death benefit that decreases each year over the duration of the policy term.
Group Underwriting Requirements
each participant completes a short application that clearly identifies the insured and the insured's beneficiary.
Return of Premium Term
ROP life insurance is an 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.
Modified Premium Whole Life
is a type of whole life policy that charges a lower premium in the first few policy years, usually 3 to 5 years, then a higher level premium for the remainder of the insured's life.
Term Insurance
is temporary protection because it only provides coverage for a specific period of time. Term insurance provides what is known as pure death protection.
Straight Whole Life
policy owner pays the premium from issue date until death or age 100, will have the lowest annual premium.
Joint Life
is a single policy that is designed to insure two or more lives. The premium is based on a joint average age between the insureds, and the death benefit is paid upon the first death only.
Credit Life Insurance
is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of death. The creditor is the owner and beneficiary of the policy.
Life Insurance for Minors
in NYS must be 14 1/2, the beneficiary may only be the minor, or the parent, spouse, brother, sister, child or grandparent of the minor. Policy on a minor under 14 1/2 may not exceed $50,000 or 50% of the amount of life insurance of the person effectuating the insurance. Under 4 1/2, $50,000 or 25%.