Chapter 4

Question 1

Industrial life insurance

Answer 1

• issues very small face amounts, such as $1,000 or $2,000.
• Premiums are paid weekly and collected by debit agents.
• Designed for burial coverage.

Question 2

Ordinary Life Insurance

Answer 2

• life insurance of commercial companies not issued on the weekly premium basis.
• Made up of several types of individual life insurance, such as temporary (term), permanent (whole).

Question 3

Group Life Insurance

Answer 3

• insurance written for members of a group, such as a place of employment, association, or a union.
• Coverage is provided to the members of that group under one master contract.
• The group is underwritten as a whole, not on each individual member.
• One of the benefits of group life coverage is usually there is no evidence of insurability required.

Question 4

Term life insurance

Answer 4

• greatest amount of coverage for a limited period of time.
• only good for a limited period of time because it has a TERMination date.
• an inexpensive type of insurance, making it an attractive option for large policies.
• the CHEAPEST type of pure life insurance, and due to having a termination date and not having any cash value, it will ALWAYS be cheaper than a whole life policy with the same face value.
• It provides a pure death protection since it only pays a death benefit if the insured dies during the policy term.

Question 5

Level term

Answer 5

• has a level face amount and level premiums.
• Premiums tend to be higher than annual renewable term because they are level throughout the policy period.
• the premiums will increase at each renewal.
• always expires at the end of the policy period.
• Level term provides a fixed, low premium in exchange for coverage which lasts a specified time period.
• Example: if D needs life insurance that provides coverage for the remainder of her working years and wants to pay as little as possible, D would need Level term.

Question 6

Level Term Insurance

Answer 6

• Life insurance written to cover a need for a specified period of time at the lowest premium is called

Question 7

Decreasing term

Answer 7

• term life insurance that provides an annually decreasing face amount over time with level premiums.
• usually used for mortgage protection.
• type of life policy which has a death benefit that adjusts periodically (according to a schedule) and is written for a specific period of time.
• usually written for a mortgage or other debt that typically decreases over time until it is paid off.
• Example: a 15 year decreasing term policy could protect a 15-year mortgage. As the mortgage balance reduces each year, the face value of the insurance policy will adjust accordingly to match. After the mortgage is paid off, the insurance policy will expire.