Chapter 8 Flashcards
Human Life Value
The Present Value of that portion of a person’s estimated future earnings that will be used to support dependents
Yearly Renewable Term Insurance
A plan that provides a level amount of insurance for 1 year, renewable for a stated number of years, with the premium at each renewal date rising at an increasing rate that reflects the rise in the mortality rate over time
Cash Value Life Insurance
A type of life insurance under which premiums are sufficient not only to pay the insurer’s death claims and expenses but also to build up a savings fund within the policy
Legal Reserve
The minimum amount of the reserve, as specified by state law, that a life insurer must maintain to meet its assumed future claim costs under a clock of policies. It is discounted for future premium and investment income under those policies
Net Amount at Risk
In a life insurance policy, the difference between the policy’s face amount and the reserve at any point in time
Modified Whole Life Insurance
A form of whole life insurance in which a level premium lower than that for conventional whole life insurance is charged for the first few policy years and a higher level premium is charged thereafter
Renewability
A feature frequently found in individual term life insurance that allows the policy owner to renew the policy for another period of protection, up to a state point in time, without having to show evidence of insurability.
Ordinary Life Insurance
A form of whole life insurance for which premiums are based on the assumption that they will be paid until the insured’s death and that provides a guaranteed cash value
Limited-Payment Life Insurance
A form of whole life insurance for which premiums are based on the assumption that they will be paid for only a specified number of years or until a specified age of the insured.
Single-Premium Whole Life Policy
A form of whole life insurance that is full paid-up upon the payment of a single premium.
Vanishing Premium
Whole Life Insurance approach designed so that if experience is favorable, the accumulation account eventually equals or exceeds the net single premium necessary to pay up the contract.
Endowment Life Insurnace
A type of life insurance policy that pays the face amount if the insured dies during a specified period of time and also pays the face amount if he or she lives to the end of that period.
Current-Assumption Whole-Life Insurance
A nonparticipating whole life insurance policy in which premium rates are redetermined by the insurer periodically, based on its then-current assumptions as to mortality, interest, and expenses.
Whole Life Insurance
A form of life insurance that provides death benefits upon the death of the insured, no matter when that occurs, if the policy is kept in force by the policy owner.
Surrender Charge
A fee imposed on the owners of certain types of life insurance policies and annuities at the time they surrender their contracts.
Reentry Term Insurance
A form of renewable term life insurance under which one renewal rate schedule is used if the insured can prove continuing insurability. and a higher schedule is used if the insured cannot prove continuing insurability.
Convertibility
A feature in term life insurance that allows the policy owner to replace the term coverage with permanent individual life insurance without having to show evidence of insurability. In group insurance, the right is available only at certain times, including termination of the insured from the group or from an eligible class within the group.
Decreasing Term Insurance
A form of term life insurance in which the amount of insurance systematically decreases from year to year
Increasing Term Insurance
A form of term life insurance in which the amount of insurance systematically increases from year to year
Participating Policy
A type of life insurance policy that can pay dividends to the policy owner
Nonparticipating Policy
A type of life insurance policy that pays no dividends to the policy owner
Variable Life Insurance
A type of life insurance in which the policy owner directs how the cash value will be invested and bears the investment risk, and in which the death benefit is linked to the investment performance of the policy.
Universal Life Insurance
A type of life insurance policy characterized by flexible premiums, a shift is some investment risk to the policy owner even though the policy owner is not allowed to direct the investment portfolio, the ability to withdraw part of the cash value.
Variable Universal Life Insurance
A type of life insurance hat combines the premium flexibility features of universal life insurance with the policy owner directed investments aspects of variable life insurance.
