Insurance Ch 6 Flashcards
Determines an appropriate amount of life insurance by estimating survivors’ needs that must be met following in individual’s premature death and compares those needs to the resources available.
Needs analysis
Determines an appropriate amount of life insurance based on the insured individual’s income earning ability. It is the present value of the income lost by dependents as a result of the insured’s death.
Human life value analysis
_______ insurance pays the face amount of the policy if the insured dies during the policy period. It provides protection for a definite but limited amount of time.
Term
This type of policy provides protection for one year, only, but permits the insured, to renew the policy for successive periods of one year at a higher premium each year, without having to furnish evidence of ensure ability at the time of each renewal.
Annual renewal term ART
Yearly renewal term YRT
This type of policy has the initial premium guaranteed for a period. The longer the guarantee, the higher, the _____ premium will be
Level term / level
This allows the insured to re-qualify at a new level premium (age-based) through a simplified underwriting process to continue the policy at a relatively low rate. If the insured does not qualify due to declining health, /she may keep the policy, but at a much higher premium.
Reentry provision
This type of policy has a level premium, but the amount of death benefit decreases.
Decreasing term
This type of policy is written on the lives of two or more persons, and payable upon the death of the first person to die. These can be in the form of term insurance or in some form of insurance that has cash value.
First to die / joint life
This provision guarantees the policy owner, the right to renew the policy for a limited number of years. The carrier usually imposes an age limit beyond which the renewal is not permitted.
Renewability
This provision permits the policy owner to exchange a term contract for a contract of permanent insurance within a specific timeframe, without evidence of insurability.
Convertibility
______ insurance is appropriate under the following circumstances
There is a limited time needed for protection.
When the dollar is available for coverage are limited, and it is more important to have sufficient coverage than cash value.
Term
Refers to any life insurance policy that covers the insured until death.
Permanent life insurance
Provides protection for the life of the insured. This does not describe how the premiums are paid, only to the duration of the protection.
Whole life insurance
A policy in which premiums are based on the assumption, they will be paid until the insured’s death.
Straight whole life insurance
Also known as ordinary life, or continuous premium whole life
With this type of policy premiums are limited by contract to a specified number of years. The premium will be higher than the straight whole life premium because the total cost is generally paid over a relatively shortened time period.
Limited pay whole life insurance
With this type of insurance, within limitations, the premiums cash values and level of protection can be adjusted up or down during the life of the permanent contract to meet the owner’s changing needs. The interest credited to the policy’s Cash value is paid at current interest rates.
Universal life insurance
With this type of life insurance, if the premiums paid plus the current cash value are not adequate to cover the cost of maintaining the policy, additional premiums must be paid to keep the policy enforce.
Universal life insurance
With Universal life insurance, the policyholder can make partial withdrawals from the policies Cash value. There is no requirement to repay the loan. The ___________ will be reduced by the outstanding loan balance. If the policy is not a __________ , the withdrawal amount is not taxed
Death benefit / modified endowment contract
With Universal life insurance, the death benefit is constant, generally ignoring the cash value increases (same as whole life). (also called _____ or _______ )
When the cash value exceeds certain benchmarks, the death benefit will _______, as required by the 1984 tax act.
Option A / Type I / increase
Level death benefits
With universal life insurance, as the cash value increases, the death benefit increases by the same amount. (Also called ______ or _______)
Option B or Type II
As with universal life contracts, the variable, universal life, policies, cash value, and ultimate death benefit is not guaranteed. However, unlike whole life and universal life, the insured’s cash value is invested in a ________. The General account (called the _________) is a liability of the insurance carrier.
Separate account/legal reserve
This type of policy provides many features of universal life, insurance and offers policy owner directed investment options of a variable annuity
Variable universal life
An ________ at age 100 is like a whole life policy.
Endowment
Regarding the test, endowment contracts are wrong or not usable answers