CPCU Ch. 9 Flashcards
Method used to determine an adequate amount of life insurance based on the survivors needs and the amount of existing life insurance, financial assets, and expected social security benefits
Needs approach
A mathematical computation used to determine how much life insurance is needed by valuing a human life
Human life value approach
Characteristics of a term insurance policy that allows the policy to be exchanged for some type of permanent life insurance policy with no evidence of insurability
Convertible
Life insurance that provides lifetime protection, accrues cash value, and has premiums that remain unchanged during the insured’s life time
Whole life insuance
Flexible premium permanent life insurance that separates the protection, savings, and expense components
Universal life insurance
A form of life insurance providing a death benefit theta may change with time due to its variable cash value
Variable life insurance
A form of universal life insurance that allows the policyholder to make fund choice for the investment competent but that has no guaranteed cash value and no guaranteed interest rate
Variable universal life insurance
Life insurance that provides coverage for a specified period, such as ten or twenty years, with no cash value
Term life insurance
Insurance that provides life insurance protection and a savings component
Universal life insurance
Person designated in life insurance policy to receive the death benefit
Beneficiary
A provision that continues a life insurance policy in force for a certain number of days (usually thirty or thirty one) after the premium due date, during which time the policyowner can pay the overdue premium without penalty
Grace period
A clause that states that the insurer cannot contest the policy after it has been in force for a specified period, such as two years, during the insured’s lifetime
Incontestable clause
Provisions in a life insurance policy that give the policyowner a choice of ways to use the cash value if the policy is terminated and that protect the policyowner from forfeiting the cash calue
Nonforfeiture options
Various ways of paying life insurance policy proceeds to the beneficiary
Settlement options
A clause that states the insurer will not pay the death benefit if the insured commits suicide within a certain period (usually two years) after policy inception
Suicide clause
