Chapter 9 Flashcards
What are the products related to death?
Whole-life policy
Term assurance policy
What is whole-life policy?
This type of policy pays a benefit, the sum assured, when the insured life dies, whenever that may be.
What does “lapse” mean in policies?
“lapse” means an insurance policy is no longer active or in force, typically due to non-payment of premiums after the grace period, resulting in a loss of coverage and benefits
What is a term assurance policy?
A term assurance policy pays a benefit, the sum assured, on the death of the
insured life provided the death occurs within a specified term chosen at the outset.If the life survives to the end of the term of the policy they will receive nothing.
What are the products related to survival?
Pure Endowment
Life annuities
What is pure endowment?
A pure endowment policy has a specified term and pays out a lump sum if the
insured life is still alive at the end of the term of the policy. In a way, this is a form of saving for an expense that will not be relevant if the person is dead.
What is a life annuity
A life annuity is a policy which provides the insured (the annuitant) a regular
payment while they are still alive.
What is a whole-life annuity?
A annuity may be for the remainder of the
insured life’s life time, in which case it is referred to as a whole-life annuity.
What is a temporary annuity?
A annuity payments may be made while the insured life is alive, but may cease after
a specified term, in which case the annuity is called a temporary annuity.
What is a deferred annuity?
Life annuities may start immediately or may start at some future date. If they
start at some future date they are referred to as a deferred annuity.
What is the product which pay out on both death and survival?
Endowment assurance
What is Endowment assurance?
An endowment assurance policy is a combination of a pure endowment and a term assurance. Endowment assurances have a predefined term. If the insured life dies before the end of the term, a benefit will be paid; and if the insured is still alive at the end of the term, they will also receive a benefit.
What are the distribution channels?
Intermediaries(financial advisers or brokers)
Agency force (tied agents)
Own Salesforce
Direct Sales
Describe Intermediaries (financial advisers or brokers)
Aim to find best deal for clients, not tied to a insurance company, wealthy clients. Risk of anti selection, intensive underwriting required
Describe Agency force (tied agents)
Sell products for only one insurance company, or a handful of them. Earn commission. Customers will vary
Describe Own salesforce
Insurance companies may employ salespeople for specific purpose of selling their products. Compensation: mixture of salary and commission. Customers will vary.
