Life Insurance Policies part A - 20%

Pure death protection

- if the insured dies during this term, the policy pays the death benefit to the beneficiary - if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term - there is no cash value or other living benefits

Three types of Term coverage

1. Level 2. Increasing 3. Decreasing Regardless of type, the premium is level throughout. Most are renewable, convertible, or renewable.

Renewable

Allows the right to renew coverage without evidence of insurability. Renewed at current age with new premium based on age.

Return of Premium

An increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid. If the insured is still alive and healthy at the end of the policy - guaranteed return of premium. Not taxable.

Decreasing Term

Level premium and decreasing death benefit. Commonly used for mortgage or other debt insurance if the insured dies prematurely. Convertible, but not renewable.

Increasing Term

Level premiums and increasing death benefit. Increases by fixed amount or percentage of original amount. Usually provide refund of premiums or increase of coverage.

Level Term Insurance

Most common. Temporary protection. Death benefit does not change for the life of the policy.

Annually Renewable Term

Purest from of term insurance. Death benefit remains level. Premium increases annually as probability of death increases.

Convertible

Right to convert to a permanent policy without evidence of insurability. Premium based on age attained.

Term insurance

Temporary protection because it only provides coverage for a specific period of time. Also know as (pure Life insurance). Provides for the greatest amount of coverage for the lowest premium compared to other forms of protection Has no cash value

Level Premium

the premium that does not change throughout the life of a policy