Ch. 3 pt 1 Flashcards
Industrial Life Insurance
Issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage
Ordinary Life Insurance
Individual life insurance that includes many types of temporary and permanent insurance protection plans written on individuals. Life insurance of commercial companies not issued on the weekly premium basis. It is made up of several types of individual life insurance, such as temporary (term), permanent (whole)
Group Life Insurance
Insurance written for members of a group, such as a place of employment, association, or a union
Term Life Insurance
Gives you the greatest amount of coverage for a limited period of time
Level Term
Has a level face amount and level premiums
Decreasing Term
Term life insurance that provides an annually decreasing face amount over time with level premiums
Credit Policies
Credit policies are insurance policies designed to cover outstanding debts if the borrower dies, becomes disabled, or experiences other specified events. They ensure that the loan or credit balance is paid off, protecting both the borrower’s estate and the lender. These policies are often used in conjunction with loans, such as mortgages or personal loans
Increasing Term
Increasing Term Life Insurance is a policy that provides a death benefit that increases over time, helping to protect against inflation and rising financial needs. While premiums typically start lower, they increase as the coverage amount grows
Convertible Term
A provision that allows policy owners to convert their term insurance into permanent policies without showing proof of insurability
Renewable Term
Renewable term life insurance allows the policyholder to renew the policy at the end of each term without undergoing a medical exam. Premiums may increase with each renewal, but the policy guarantees continued coverage for an additional term period
Annual Renewable Term
Annual renewable term insurance is a type of term life insurance that provides coverage for one year at a time, with the option to renew annually. Premiums may increase each year based on the insured’s age, but the policy guarantees coverage renewal without additional medical exams
Term Rider
A type of life insurance product which covers children under their parent’s policy
Whole Life Insurance
Provides death benefits for the entire life of the insured
Whole Life Straight Life Insurance
Premiums are payable throughout the insured’s lifetime, and coverage continues until the insured’s death
Whole Life Limited Pay
Whole life limited pay insurance is a type of permanent life insurance where the policyholder pays premiums for a specified period, such as 10, 20, or 30 years, rather than for their entire lifetime. After this period, the policy is fully paid up, and no further premiums are required, while the coverage continues for life or until age 100
Whole Life Modified
A policy where the premium stays fixed for the first 5 years, and then increases in year 6 and stays level for the remainder of the policy
Whole Life Modified Endowment Contract
A Whole Life Modified Endowment Contract is a life insurance policy that has been overfunded to the point where it surpasses IRS limits, resulting in different tax treatment. The primary impact of MEC status is that any withdrawals or loans taken from the policy are subject to immediate taxation on the earnings portion and may incur an additional penalty if the policyholder is under 59½. Despite these changes, the policy still provides a tax-free death benefit to beneficiaries
Joint Life Policy
The policy is shared between two people, and when one person dies, the other receives the entire account. If B and M were insured under this policy and B were to die, M would receive the entire benefit and would also no longer be insured
Joint Survivor or Last Survivor Life Policies
Covers two lives but only pays benefits after the death of the last insured. For example, say B and M purchase this policy. If B were to die first and then M died 10 years later, no benefits would be paid out from the policy until M died
Family Maintenance Policy
Allows for death benefit to be paid out in installments if you die younger than a certain age. If you die older than that age, beneficiaries will recieive the payout in a lump sum
Family Income Policies
Pays an income beginning at the insured’s death and continues for a period specified from the date of policy issue. For example, G purchased a Family Income policy at age 40, with a 20-year rider period. If G were to die at age 50, G’s family would receive an income for 10 years
Adjustable Life Policy
A policy in which the insured could control the amount and frequency of payments with a death benefit that can be adjusted as their life needs change
Universal Life Insurance Policy
Incorporates flexible premiums and an adjustable death benefit. A policy that gives the most options and the most control
Variable Life Insurance Policies
Variable life insurance policies are a type of permanent life insurance that combines a death benefit with an investment component. The policyholder pays regular premiums, part of which goes toward maintaining the death benefit, while the rest is invested in various sub-accounts, similar to mutual funds, which can include stocks, bonds, and money market instruments (potential for greater returns but also riskier)
