Types of Life Insurance Policies

interest-sensitive whole life

AKA current assumption life whole life policy that provides a guaranteed rate of interest comparable to money market rates and can have fluctuating premiums based on changing assumptions about risk, interest, and expense

survivorship life

AKA second-to-die premium based on joint age that pays on the last death type of policy is often used to offset the liability of the estate tax upon the death of the last insured

term insurance

insurance offering temporary protection, aka only provides coverage for a specific period of time AKA "pure life insurance' offers the GREATEST amount of coverage for the LOWEST premium cannot buy or renew after a certain age

increasing term

policy with level premiums and a death benefit that increases each year over the duration of the policy term ideal to handle inflation and the increasing cost of living often added to another policy as a rider

pure death protection

protection offered through term insurance -> death benefit paid to beneficiary -> if it's canceled or expired, nothing is payable at end of term -> there is no cash value or other living benefits

joint life

single policy that insures two or more lives the premium is based on a joint AVERAGE age & the death benefit is paid out on the FIRST DEATH ONLY

family term rider

spouse term + family term = _____ ______ rider

fixed

A man wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. What type should he buy?

universal life

AKA flexible premium adjustable life insurance where the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again the policyowner can even skip premium payments without it lapsing AS LONG AS there is sufficient cash value at the time to cover the monthly deductions for cost of insurance

variable life

AKA variable whole life insurance level, fixed premium, investment-based product with a guaranteed minimum death benefit cash value of the policy is not guaranteed and fluctuates with the performance of the portfolio held in the "separate account"

adjustable life

insurance intended to combine best of term & permanent coverage insurance insured determines how much coverage is needed and the affordable amount of premium. the insurer then determines the appropriate type of insurance to meet he insured's needs policyowner can make adjustments to policy as needs change

decreasing term

policy that features a level premium and a death benefit that decreases each year over the duration of the policy term used when the amount of protection is time sensitive or decreases over time (i.e. mortgage debt or other debts)

renewable

provision that allows the policyowner the right to renew coverage at the expiration date WITHOUT evidence of insurability

credit insurance

special type of insurance coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor creditor is the OWNER and the BENEFICIARY of the policy

straight life

basic whole life policy policyowner pays the premium from the time the policy is issued until the insured's death or age 100 this type will have the lowest annual premium

permanent insurance

general term used to refer to various forms of life insurance policies that build cash value and remain effective for the entire life of the insured (or until age 100) as long as the premium is paid most common type is WHOLE

return of premium

life insurance that is an increasing term policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid

level premium term

most common type of temporary protection purchased provides a level death benefit and level premium during the policy term

option B

option indicating INCREASING death benefit

option A

option indicating LEVEL death benefit

variable universal life

type of insurance that combines many features of the whole life with the flexible premium of the universal life and the investment component of variable life a securities version of universal life insurance

modified life

type of whole life policy that charges a lower premium in the first years of the policy (lower than a straight whole life policy) but the premiums are higher in subsequent years

whole life

insurance that provides LIFETIME PROTECTION and includes a savings element (CASH VALUE) until age 100 key elements: ->premiums are higher for this type of insurance than for term insurance ->level premium based on the age at issuance ->death benefit is guaranteed and remains level for life ->living benefits include borrowing cash against the policy

indexed whole life

insurance where the cash value is dependent on the performance of the equity index, although there is a guaranteed minimum interest rate

annually renewable term

the purest form of term insurance death benefit remains level and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age

indexed universal life

universal life policy with an equity index as its investment feature the CASH VALUE is dependent upon the performance of the equity index

single premium whole life

whole life insurance providing a death benefit until death or age 100 bought with a one-time, lump-sum payment only pay one premium and it generates immediate cash

convertible

provision that provides the policy owner with the right to convert the policy to the permanent insurance policy WITHOUT evidence of insurability