Types of Life Policies
variable universal life insurance
a type of insurance that combines many features of the whole life with the flexible premium of universal life and the investment component of variable life, making it a securities version of universal life insurance.
license requirements
a variable annuity is considered a security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations.
life with period (term) certain
another life contingency payout option.
Nonforfeiture Values
benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
policy loans
can borrow cash value
liquidation of an estate
converting a person's net worth into a cash flow
decreasing term
coverage gradually decreases at predetermined times; best used when the need for protection declines from year to year
single premium whole life (SPWL)
designed to provide a level death benefit to the insured`s age 100 for a one-time, lump-sum payment. the policy is completely paid-up after one premium and generates immediate cash.
Adjustable Life
developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage). An adjustable life policy can assume the form of either term insurance or permanent insurance.
securities
financial instruments that may trade for value (for example, stocks, bonds, options)
Policy maturity
in life policies, the time when the face value is paid out
indexed whole life (or equity index whole life)
insurance is that the cash value is dependent upon the performance of the equity index, such as S&P 500 although there is a guaranteed minimum interest rate.
Joint life
is a single policy that is designed to insure two or more lives. joint life policies can be in the form of term insurance or permanent insurance.
universal life
is also known by the generic name of flexible premium adjustable life. That implies that the policy and to later decrease it again.
return of premium (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.
survivorship life
mush the same as joint life in that it insures two or more lives for a premium that is based on a joint age.
Decreasing Term
policies featured a level premium and a death benefit that decreases each year over the duration of the policy term. Decreasing term is primarily used when the amount of needed protection is time sensitives or insure the payment of a mortgage or other debts if the insured dies prematurely.
Level premium
provides a level death benefit and level premium during the policy term
renewable
provision allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability.
convertible
provision provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability.
target premium
recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
annually renewable term
renews each year without proof of insurability. premiums increase due to attained age
Minimum premium
the amount needed to keep the policy in force for the current year. paying the minimum premium will make the policy perform as an annually renewable term product.
Face Amount
the amount of benefit stated in the life insurance policy
fixed-period installments
the annuitant selects the time period for the benefits, and the insurer determines how much each payment will be, based on the value of the account and future earnings projections. this option pays for a specified amount of time only, whether or not the annuitant is living
endow
the cash value of a whole life policy has reached the contractual face amount
cash value
the cash value, created by the accumulation of premium, is scheduled to equal the face amount of the policy when the insured reaches age 100 (the policy maturity date), and is paid out to the policyowner.
death benefit
the death benefit is guaranteed and also remains level for life
Attained Age
the insured's age at the time the policy is issued or renewed
interest rate
the issuing insurance company does not guarantee a minimum interest rate,
Level Term Insurance
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,
underlying investment
the payments that the annuitant makes into the variable annuity are invested in the insurer`s separate account, not their general account,
beneficiary
the person who receives annuity assets (either the amount paid into the annuity or the cash value, whichever is greater) if the annuitant dies during the accumulation period, or to whom the balance of annuity benefits is pad out
annuitant
the person who receives benefits or payments from the annuity, whose life expectancy is taken into consideration, and for whom the annuity is written.
living benefits
the policy can borrow against the cash value when the policy is surrendered.
straight life
the policyowner pays the premium from the time the policy is issued until the insured`s death or age 100 (which ever comes first). of the common whole life policies, straight life will have the lowest annual premium.
joint average age
the premium is based on a joint average age that is between the ages of the insureds
Level Premium
the premium that does not change throughout the life of a policy
owner
the purchaser of the annuity contract, but not necessarily the one who receives the benefits. the owner of the annuity has all of the rights
Annually renewable term (ART)
the purest form of term insurance. the death benefit remains level (in that sense, it`s a level term policy), 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, as the probability of death increases.
cash refund
when the annuitant dies, the beneficiary receives a lump-sum refund of the principal minus benefit payments already made to the annuitant. Cash refund option does not guarantee to pay any interest.
installment refund
when the annuitant dies, the beneficiary will continue to receive guaranteed installments until the entire principal amount has been paid
interest-sensitive whole life current assumption
whole life policy that provides a guaranteed death benefit to age 100. the insurer sets the initial premium based on current assumptions about risk, interest and expense. if the actual values change, the company will lower or raise the premium at designated intervals.
deferred
withheld or postponed until a specified time or event in the future
cash value
a policy's savings element or living benefit
Annuity
a contract that provides income for a specified period of years, or for life
