Chapter 9 - Term Life Insurance

Question 1

Term or Temporary Life Insurance

Answer 1

Specific period of time, 1 hour or 50 years. It’s pure death protection, no cash value. Premium stays level and typically really low as this only deals with death.

Annually Renewable Term - means the insured can renew on a year to year basis WITHOUT proving insurability after the term of the original policy. The premium will go up with each year renewal, because of higher age.

Reentry Term - offers two premium levels for renewal, a less expensive premium for clients who provide insurability or a standard premium (higher) for clients who do not take the physical and provide insurability.

Convertible Term - policy owner is given the option of some day exchanging the Term coverage to a whole life policy without providing insurability.

Level vs Increasing vs Decreasing Term: (premium stays the same)
-Level, premium stays the same.
-Increasing, the death benefit keeps pace with inflation, benefits needs, ect. The premium stays level.
-Decreasing, the face value decreases with each passing year. Used to pay off things like mortgage debts. Often called Mortgage Protection. The premium remains level.

Credit Term Life Insurance:
- Group policy: issued to the creditor (bank or car dealer), premium paid by debtor. All of the debtors are required to owe money to the same creditor. If the debtor dies, the policy pays the creditor until the debt is paid and then any balance is paid to the debtor.
- Individual credit policies: premium paid by debtor. If debtor dies, the policy pays the creditor and the left over goes to the debtor.