Insurance Policies

Question 1

Insurance that issues very small face amounts ($1000 to $2000). Premiums are paid weekly and collected by debit agents. Designed for burial coverage.

Answer 1

Industrial Life Insurance

Question 2

Life insurance of commercial companies not issued on the weekly premium basis. Made up of several types of individual life insurance (both temporary and permanent)

Answer 2

Ordinary Life Insurance

Question 3

Insurance written for members of a group, such as place of employment, association, or a union. Coverage is provided to the members of that group under one master contract. The group is underwritten as a whole, not on each individual member. One of the benefits of group coverage is usually there is no evidence of insurability required.

Answer 3

Group Life Insurance

Question 4

Gives the greatest amount of coverage for a limited period of time. There is a termination date and no accumulation of cash value. Provides a pure death protection since it will only pay the death benefit.

Answer 4

Term Life Insurance

Question 5

Characterized by a level face amount and level premiums. Premiums will increase at each renewal.

Answer 5

Level Premium Level Term Insurance

Question 6

Characterized by annually decreasing face amount over a time with level premiums. Used for mortgage protection. The death benefit will decrease over a specific period of time.

Answer 6

Decreasing Term Insurance

Question 7

Characterized by purchase of a decreasing term policy matched to the length of the loan period and decreasing insurance amount matched to the decline loan balance

Answer 7

Credit Term Policies

Question 8

Characterized by increasing face amount over time based on specific amounts or a percentage of the original face amount

Answer 8

Increasing Term Insurance

Question 9

Characterized by the ability to covert their term insurance into permanent policies without showing proof of insurability. Premiums will increase due to the use of the attained age of the insured.

Answer 9

Convertible Term Insurance

Question 10

Characterized by the guarantee the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.

Answer 10

Renewable Term Insurance

Question 11

Characterized by coverage that provides a level face amount that renews annually. Guaranteed renewable annually without proof of insurability.

Answer 11

Annual Renewable Term Insurance

Question 12

Characterized by a product which covers children under their parents policy. Cheaper than each family member having an individual policy.

Answer 12

Term Rider

Question 13

Provides a death benefit the entire life of the insured and provides living benefits in the form of cash value. Matures at age 100 and normally has level premiums. The difference in these policies is how the policy is paid.

Answer 13

Whole Life Insurance

Question 14

Characterized by premiums that are payable throughout the insureds lifetime, and coverage continues until the insureds death. Fixed premiums, a level death benefit, and cash value.

Answer 14

Whole Life-Straight Life Insurance

Question 15

Characterized by coverage that remains on a limited-pay policy until the age of 100 or death, whichever occurs first. Premium payments are limited to a certain period, but protection lasts until death.

Answer 15

Whole Life - Limited Pay Insurance

Question 16

Characterized by the premiums that stay fixed for 5 years, and then increase in year 6, which them remain level for the remainder of the policy.

Answer 16

Whole Life - Modified

Question 17

Characterized by a policy that exceeds the maximum amount of premium that can be paid into a policy and still have it be recognized as a life insurance contract. Does not meet the 7-pay test and is considered overfunded, thus losing favorable tax treatment.

Answer 17

Whole Life - Modified Endowment Contract (MEC)

Question 18

Characterized by coverage on lives of 2 individuals and save on premium costs by averaging the ages of the two insured. Pays the face amount after the first person covered on the policy dies, coverage is then no longer on the survivor.

Answer 18

Joint Life Insurance

Question 19

Characterized by coverage on the lives of 2 individuals and saves the premium cost by averaging the ages of the two insured. The death benefit is paid upon the death of the survivor of the policy.

Answer 19

Joint Survivor or Last Survivor Life Policy

Question 20

Characterized by paying the monthly income from the date of death of the insured to the end of the preselected period. Face amount is payable at the end of the preselected period.

Answer 20

Family Maintenance Policy

Question 21

Characterized by payable income starting at the insureds death to the family and continues for a period specified from the date of policy issue.

Answer 21

Family Income Policy

Question 22

Characterized by coverage that offers flexible premiums as financial needs and objective change. Increasing the face amount will typically require proof of insurability.

Answer 22

Adjustable Life Insurance Policy

Question 23

Characterized by the incorporation of flexible premiums and an adjustable death benefit. Investment gains will go towards the cash value. Allows for the most options and most control.

Answer 23

Universal Life Insurance Policy

Question 24

Characterized by interest sensitive policies. Fixed level premiums, but the cash value and death benefit can fluctuate according to the performance of its underlying portfolio.

Answer 24

Variable Life Insurance

Question 25

Characterized by the policyowner having controls of cash values and selects the timing and amount of premium payments.

Answer 25

Variable Universal Whole Life (VUL)

Question 26

Characterized by combining most of the features, benefits, and securities of traditional life insurance with the potential or earned interest based on the upward movement of an equity index. Have a guaranteed minimum interest rate, tax deferral of interest accumulations, and policy loan access. Keep pace with or beat inflation. Death benefit is based on the coverage amount selected by the contract owner plus the account face value.

Answer 26

Equity Index Universal Life Insurance

Question 27

Characterized by a policy where an investor purchases a policy on the life of someone to profit upon the death of that person, in exchange for a monetary living benefit for the insured. They are illegal as they are designed to circumvent the insurable interest requirements of an insurance contract and position the policy owner to benefit upon the death of the insured.

Answer 27

Investor (or Stranger) Originated Life Insurance Policy (IOLI, or SOLI)

Question 28

Equity amount or “savings” accumulated in a whole life policy

Answer 28

Cash Value

Question 29

Characterized by payment of the face amount at the end of a fixed period, at a specific age of the insured, or at the insureds death before the end of the stated period.

Answer 29

Endowment Policy

Question 30

Characterized by a contract that promises to pay at the insureds death the face amount of the policy plus a sum equal to the policy’s cash value.

Answer 30

Face Amount plus Cash Value Policy

Question 31

Is written on the lives of children who are within specified age limits and generally under parental control

Answer 31

Juvenile Insurance

Question 32

Characterized by a policy that does not require a medical exam and tends to be more expensive than medically underwritten policies.

Answer 32

Non-Medical Life Insurance

Question 33

Suggested premium used in Universal Life policies. Does not guarantee there will be adequate funds to maintain the policy to any time, especially to life. Gives the indication of what is needed to maintain the policy.

Answer 33

Target Premium