Chapter 11 Vocab (Text) Flashcards
Premature Death
defined as the death of a family head with outstanding unfulfilled financial obligations
Traditional Families
families in which only one parent is in the labor force, and the other parent stays at home to take care of dependent children
Blended Family
a family is one in which a divorced spouse with children remarries, and the new spouse also has children
Human Life Value
defined as the present value of the family’s share of the deceased breadwinner’s future earnings
Readjustment Period
one or two year period following the breadwinner’s death
Dependency Period
follows the readjustment period; the period until the youngest child reaches age 18
Blackout Period
the period from the time that Social Security survivor benefits terminate to the time the benefits are resumed
Term Insurance
provides temporary insurance protection
Reentry Term
term insurance policy in which renewal premiums are based on select (lower) mortality rates if the insured can periodically demonstrate acceptable evidence of insurability
Whole Life Insurance
cash value policy that provides lifetime protection
Ordinary Life Insurance
a level-premium policy that provides cash values and lifetime protection to age 121
Legal Reserve
The excess premiums paid during the early years are accumulated at compound interest and are then used to supplement the inadequate premiums paid during the later years of the policy
Net Amount of Risk
the difference between the legal reserve and face amount of insurance
Cash-Surrender Values
the amount paid to a policyholder who surrenders the policy
Limited Payment Policy
another type of traditional whole life insurance where the insurance is permanent and the insured has lifetime protection. The premiums are level, but they are only paid for a certain period
Single-Premium Whole Life Insurance
provides lifetime protection with a single premium
Endowment Insurance
pays the face amount of the insurance if the insured dies within a specified period; if the insured survives to the end of the endowment period, the face amount is paid to the policyholder at that time
Variable Life Insurance
defined as a fixed-premium policy in which the death benefit and cash values vary according to the investment experience of a separate account maintained by the insurer
Universal Life INsurance
flexible premium policy that provides protection under a contract that unbundles the protection and saving components
Indexed Universal Life Insurance
variation of universal life insurance with certain key characteristics; there is no minimum interest rate guarantee, additional interest may be credited to the policy based on investment gains of a specific stock market interest, there is a formula for determining the amount of enhanced interest credited to the policy, and there is often considerable consumer misunderstanding and unrealistic performance expectations under this type of policy
Variable Whole Life Insurance
important variation of whole life insurance; similar to a universal life policy with two major exceptions: the p/h determines how the premiums are invested and the policy does not guarantee a minimum interest rate or minimum cash value
Current Assumption Whole Life Insurance
a nonparticipating whole life policy in which the cash values are based on the insurer’s current mortality, investment, and expense experience
Modified Life Policy
whole life policy in which premiums are lower for the first three to five years and higher thereafter
Preferred Risk
individuals whose mortality experience is expected to be lower than average
Second to Die Life INsurance
form of life insurance that insures two or more lives and pays the death benefit upon the death of the second or last insured
Savings Bank Life Insurance (SBLI)
type of insurance that was sold originally by savings banks in Massachusetts, New York, and Connecticut
Industrial Life Insurance
class of life insurance that was issued in small amounts; premiums were payable weekly or monthly; and an agent of the company collected the premiums at the insured’s home
Home Service Life Insurance
Today’s industrial life insurance
Group Life INsurance
type of insurance that provides life insurance on a group of people in a single master contract
