Life Insurance Policies
How long does an individual have after termination to convert from a Group Life?
31 days. (During this time, the employee is still covered by the Group Life.
What is Variable Life?
A level, fixed premium, investment-based product. Fixed premiums and guaranteed minimum death benefit.
Why would someone purchase a Limited Payment Policy?
A person who does not want to pay after a certain point. Someone who wants to pay only during their working yeas and not in retirement.
What is Juvenile Life? (Jumping Juvenile)
Any life insurance written on the life of a minor. The face amount increases at the predetermined age, often 21. The premium is level. (Stays the same as issuance age.)
What is the cost of coverage based on in a Group Life?
Average age of group and the ratio of men and women
How do insurers set the initial premiums for Interest- Sensitive?
Based on current assumptions about risk, interest and expense.
What is Adjustable Life?
Can assume the form of either term or permanent insurance and the insured typically determines how much coverage is needed and the affordable premium. The insurer will then determine the appropriate type of insurance to meet the insured'd needs.
What is SurvivorShip (Second to die)?
It insures two or more lives for a premium that is based on a joint age and the death benefit is paid-out after the second dies.
What is Whole Life Insurance?
It is a permanent life insurance the provides lifetime protection and includes a savings element (cash value).
What are the three basic types of term coverage based on the face amount (death benefit) changes during the policy term?
Level Increase Decrease
What is the most common type of term insurance?
Level Term insurance.
what are the two different features of Group life insurance then an individual?
Not required to prove insurability Individuals under the plan do not receive a policy because they do not own or control it.
What are the characteristics of a Group Life?
Purpose of group size of group Turnover of the group Financial strength of the group
What is Continuous Premium?
The policyowner pays the premiums at the time of issuance until the death of the insured or age 100.
How is the premium determined for term insurance during a renewal, selling, or converting?
The premium is determined by the attained age.
What is Permanent Life insurance?
a general term that means a policy builds up cash value and remains on effect for the entire lifetime of the insured.
How are Indexed Whole Life policies classified?
Depend on whether the policyowner or the insurer assumes the inflation risk. If insurer assumes risk, then the premiums remain level. If the insured assumes risk, then the premiums increase with the increase in the face amount.
What are the Group Life underwriting requirements?
Each individual must identify the insured and insured's beneficiary.
What is Interest-Sensitive Whole Life? (Current assumption)
A whole life policy that provides a guaranteed death benefit to age 100 and credit the cash value with the current interest rate that is usually comparable to money market rates. (provides a minimum guarantee rate of interest.)
What are the policyowner's options in adjusting the Adjustable Life policy?
Increase or decrease the premium or the premium-paying period Increase or decrease the face amount Change the period of protection
When is decreasing term used?
When the amount of needed protection is time sensitive or decreases over time. (People purchase it to insure the payment of a mortgage or other debts.
In Adjustable Life insurance, what will require the proof of insurability?
When the death benefit increases or lowering a premium.
When is Joint Life used?
When there is a need for two or more persons to be protected, but the need for insurance is no loner present after the first to die.
What is Pure Death Protection?
If the insured dies during the term, the policy pays the death benefit to the beneficiary. If the policy is canceled for expired prior to the insured's death, nothing will be payable. There is no cash value or living benefits.
How must agents be certified to sell variable life?
Must be registered at FINRA and licensed by the state.
What is Universal Life insurance? (Flexible premium adjustable life)
Policyowner has the flexibility to increase or decrease the premium paid into the policy. They may even skip a payment only if there is sufficient cash value at the time to cover the monthly deductions for cost of insurance. (If cash value is too small, the policy will expire.)
What kind of coverage do term insurance provide?
Provides greatest amount of coverage for the lowest premium; compared to other protections.
What is the sponsor or employer of a Group Life insurance plan issued?
a master policy (They are the policyowner)
What are benefits of Joint Life?
The premiums are less than for the same type and amount of coverage on the same individuals.
What is Limited Payment?
The premiums will be completely paid off way beyond age 100. Shorter paying premium period. High premium payment
What is Modified Life?
A whole life insurance that charges a lower premium in the first few years (3-5) then a higher premium for the remainder of the term.
What is Graded Premium?
A whole life insurance that typically starts the premium 50% or less then straight-life policy and then gradually increases in a period of 5-10 years and then remains level for the remainder of the policy term.
What happens in a Group Life if the master contract is terminated?
Every individual who has a plan for at least 5 years will be allowed to convert to an individual permanent insurance with the same coverage.
Why would someone purchase a Modified Life?
Individuals who are just starting out and have limited financial resources but will be able to afford higher premiums in the future.
What is Credit Life Insurance?
Insure the life of a debtor and pay off the balance of a loan in the event of the death of the debtor. It can be an individual or group policy.
Universal Life has a flexible premium policy and what other type of policy?
Interest sensitive policy. It guarantees a contract interest rate and offers the poliyowner a current interest rate, which is not guaranteed.
In Universal Life insurance, what are the two choices in adjusting the premiums?
Minimum premium which is the amount needed to keep policy in force. (will preform as a annually renewable term) Target premium which should be paid in order to cover the cost of insurance protection and to keep the policy in force.
Who is the beneficiary and the policyowner?
The creditor
What is group Life Insurance?
A policy issued to the sponsoring organization and covers the lives of more than one individual member of the group.
What is Term Insurance? (Pure Life Insurance)
A temporary protection because it only provides coverage for a specific time period.
What is Joint Life (First to die)?
Can be either term or permanent that insures two or more lives. The benefit is paid-out only when the first insured dies.
What are the 3 basic Whole Life Insurance?
Continuous Premium (Straight life) Limit Payment Single Premium
What is Single Premium?
One time lump-sum payment of premium. The policy is completely paid-up after one premium. It generates immediate cash value.
How does a member terminate a Group Life membership and convert to an individual membership?
They can convert to a permanent term that will be equal to the group term face amount but the premium will be higher.
In Adjustable Life, what are the cash values?
They only develop when the premiums paid are more than the cost of the policy.
What is Level Premium term?
Provides a level death benefit and a level premium during the policy term.
Why is Decreasing term convertible but not renewable?
It is convertible and not renewable because the death benefit is 0$ at the end of the term.
What is the cash value for Whole Life insurance?
It is created by the accumulation of premium is schedule to equal the face amount of the policy when the insured reaches age 100 or dies.
What are the key characteristics of a Whole Life Insurance?
Level premium Level benefit and guaranteed Cash Value Living benefits (Policy loans, nonforfeiture values)
Does Variable have cash value?
The cash value fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer.
What is Equity Index?
The cash value is dependent upon the performance of the equity index with a guaranteed interest rate.
What is Decreasing Term?
The death benefit decreases each year over the duration of the policy term.
What is level term insurance?
The death benefit is level. (Does not change throughout the policy term.)
What is option A for Universal Life?
The death benefit remains level while the cash value gradually increases, thereby lowering the pure insurance with the insurer in the later years.
What is Annually Renewable Term?
The death benefit remains level, and policy is guaranteed to be renewable each year without proof of insurability. The premium increases annually according to the attained age. (The premium stays level throughout the term, until renewal.)
Who is the payor in the Credit life insurance?
The debtor
Regardless of the term insurance purchased, what is the premium and the death benefit?
The premium remains level, at the same amount as issued. The death benefit can fluctuate depending on the type of term insurance.
What is options B for Universal Life?
the annual cash value increases so that the death benefit gradually increases each year by the amount the cash value increases. (At any time, the death benefit will equal the face amount plus the cash value.)
What are the two death benefit options offered by the Universal Life insurance?
Option A (Level death benefit) Option B (Increasing Death Benefit)
What are the functions of Joint Life?
Premium is based on a joint average age of the insureds. Death benefit is paid upon the first death only.
What are members of Group life insurance plan issued?
a certificate of insurance
