Chapter 11 Vocab (Notes) Flashcards
Premature Death
defined as the death of a family head with outstanding unfulfilled financial obligation
Human Life Value
the present value of the family’s share of the deceased breadwinner’s future earnings
Readjustment Period
one to two year period immediately following the breadwinner’s death during which time the family should receive approximately the same amount of income it received while the breadwinner was alive
Dependency Period
period of time following the readjustment period during which the surviving spouse’s children are under 18 and therefore, dependent on the parent
Blackout Period
The period during which Social Security benefits are not paid to a surviving spouse - between the time the youngest child reaches age 16 and the surviving spouse’s 60th birthday
Term Insurance
provides temporary protection
Cash Value Life Insurance
has a savings component and builds cash values
Convertible
the policy can be exchanged for a cash value policy without evidence of insurability
Attained Age Method
premium charged for the new policy is based on the insured’s attained age at the time of conversion
Original Age Method
premium for new policy is based on the insured’s original age when the term insurance was first purchased
Yearly Renewable Term Insurance
Issued for one year
Term to Age 65 Policy
provides protection to age 65 at which time the policy expires
Decreasing Term Life Insurance policy
the face value declines each year
Re Entry Term Life Insurance policy
renewal premiums based on select mortality rates if the insured can periodically demonstrate acceptable evidence of insurability
Return of Premiums Term Insurance
a product that returns the premiums at the end of the term period provided the insurance is still in force
Whole Life Insurance
Cash value policy that provides lifetime protection
Ordinary Life INsurance
level premium policy that provides lifetime protection
Legal Reserve
liability that must be offset by sufficient financial assets
Net Amoutn of Risk
difference between the legal reserve and the face amount of coverage
Limited Payment Life Insurance Policy
insured has a lifetime protection, level premiums, but they are only paid for a certain period
Cash Surrender Values
a policy holder overpays for protection in the beginning resulting in legal reserves and the accumulation of cash values, the policyholder has the right to borrow the cahs value or exercise cash surrender options
Single Premium Whole Life Policy
provides lifetime protection with a single premium
Endowment insurance
pays the face amount of insurance if the insured dies, within a specified period. If insured is alive at the end of the period, face amount is paid to the policyholder
Variable Life Insurance
fixed premiums, death benefit and cash values vary according to investment experience of a separate account maintained by the insurer
Universal Life Insurance
Flexible premium policy that provides lifetime protection
Indexed Universal Life Insurance
variation of universal life insurance with key characteristics
Variable Universal Life Insurance
important variation of whole life insurance that is mostly sold as investments or tax shelters, the policyholder decides how premiums are invested, the policy does not guarantee a minimum interest rate or minimum cash value, and has relativley high expense charges
Current Assumption Whole Life Insurance
nonparticipating whole life policy in which cash values are based on the insurer’s current mortality, investment, and expense experience
Redetermination Provision
allows the insurer to recalculate the premium after the initial guaranteed period expires
Modified Life
whole policy where premiums are lower for 1st 3-5 years and higher thereafter
Preferred Risk
Policies sold at lower rates to individuals whose mortality experience is expected to be lower than average
Second to Die Life INsurance
insures two or more lives and pays the death benefit upon the death of the second or last insured
Savings Bank Life Insurance (SBLI)
Life insurance sold by savings banks
Industrial Life Insurance
Policies sold in small amounts and an agent of the company collected premiums at insured’s home
Group Life Insurance
provides life insurance on a group in a single master contract
