Chapter 8 Flashcards
Term insurance
Protection during the term of the policy
Premium that covers current M&E
Renew ability
Convertibility
Non level term
Effect in of the cash value
Serves as a major source of insurers investable funds
Adds to the flexibility of the life insurance policy
Is useful as collateral for credit purposes
Makes permanent death protection possible
Whole life insurance
Permanent protection
Level premium
Premium in early years exceeds M&E
Accumulation of cash value
Ordinary life insurance
Limited payment life insurance
Current assumption whole life
Usually non participating, can reduce or eliminate charges
Guaranteed maximum premium based on Mac M&E and minimum interest rate
Premiums must be paid or policy lapse
Low premium design
High premium design
Variable life insurance
Policy owner selects investments
Premiums are fixed
Policies can only be sold w/ prospectus
Death benefit depends on investment performance
Policy loans are allowed but smaller percentage than traditional
Contracts contain normal non forfeiture
Universal life
Premium flexibility
Market rates of interest credited
Unbundling of cost elements
Partial withdrawals allowed
Differential interest crediting rates
Back end expense loads in case of surrender
Choice of death benefit design
Variable universal life
Premium flexibility of universal
Death benefit design of universal
Investment flexibility of variable