Chapter 8 Flashcards

0
Q

Term insurance

A

Protection during the term of the policy

Premium that covers current M&E

Renew ability

Convertibility

Non level term

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1
Q

Effect in of the cash value

A

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

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2
Q

Whole life insurance

A

Permanent protection

Level premium

Premium in early years exceeds M&E

Accumulation of cash value

Ordinary life insurance

Limited payment life insurance

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3
Q

Current assumption whole life

A

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

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4
Q

Variable life insurance

A

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

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5
Q

Universal life

A

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

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6
Q

Variable universal life

A

Premium flexibility of universal

Death benefit design of universal

Investment flexibility of variable

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