Life Insurance Policies

Question 1

Level term (term life insurance)

Answer 1

Pure protection that lasts for a specific term, most insurance for least premium. Coverage stays the same for a specific period. 

Question 2

Annual renewable term (term life insurance)

Answer 2

Policy renews every year without proof of insurability, premiums increase each year because they are based on attained age 

Question 3

Decreasing term (term life insurance, usually used for credit life)

Answer 3

Coverage decreases as your debt decreases. Best used when the need for protection declines from year to year 

Question 4

Straight life (whole life insurance/cash value)

Answer 4

Basic policy, level death benefit — insured pays level premiums until death or age 100, whichever occurs first

Question 5

Limited Pay (whole life insurance/cash value)

Answer 5

Premiums are paid until a certain age or time. Although premiums are paid up, coverage remains until death or age 100

Question 6

Single premium (whole life insurance/cash value)

Answer 6

Premiums paid in one lump sum and coverage continues to age 100

Question 7

Adjustable life (flexible premium policies;cash value)

Answer 7

Three parts of the policy are adjustable(flexible): 
-Coverage
-premium
-type of plan
The insured chooses two and the insurer one

Question 8

Universal life (Flexible premium policies;cash value)

Answer 8

• Interest sensitive cash value
• Flexible coverage and premiums
• Two death benefit options A & B
  A - only gets what is greater
  B - Gets both (life insurance , cash value)
• can make partial surrender/cash withdrawal
• Mortality charger deducted each month from cash value for cost of insurance & also expenses

Question 9

Joint life (specialize policies, first to die)

Answer 9

2 or more insureds  on the same policy.

The policy pays the death benefit when the first insured dies

Question 10

Survivorship life  (specialize policies, second to die)

Answer 10

2 or more insured on the same policy.

The policy pays the death benefit when does the LAST/SECOND insured dies 

Question 11

Group life (specialized policies)

Answer 11

• Master contract goes to sponsor; usually employer
• certificate of insurance goes to member
• usually written for employee-employer groups
• under written as a group
• contributory-members pay
• noncontributory-owner pays
• ratings: previous group claims experience determines premiums
• conversion to individual policy and 31 days: same face amount at higher premiums due to attained age

Question 12

Mortgage redemption (special coverages)

Answer 12

• Insurers borrower for an amount equal to the mortgage
• if the insured/borrower dies, the insurer assumes responsibility for paying the outstanding loan balance to the insureds creditor 
  

Question 13

Family maintenance (Special coverages)

Answer 13

A life insurance policy based on a family income policy which combines whole life and level term

Question 14

Family policy ( special coverages, Family Protection)

Answer 14

• Combines whole life with term insurance to cover family members in a single policy
• provides coverage on each member of the family

Question 15

Family income policy (special coverages)

Answer 15

• A combination of decreasing term Insurance and whole life insurance on the breadwinner of the family
• designed to provide an income period which begins from the effective date of the policy & commonly runs for 20 years

Question 16

Jumping juvenile (special coverages)

Answer 16

• Any life insurance written on the life of a minor
• Face amount increases at predetermined age, often 21
• The face amount jumps but the premium remains level