life insurance policies Flashcards
insurance issues very small face amounts,$1000-$2000. Premiums are paid weekly and collected by debit agents. This was designed for burial coverage
industrial life
insurance written for members of a group, such as a place of employment, or a union. coverage is provided to the members of the group under one master contract. usually no evidence of insurability required
group life
made up of several types of individual life insurance, like term or whole.
ordinary life
life insurance that gives you the greatest amount of coverage for a limited period of time.
term life
Has a level face amount and level premiums. Life insurance written to cover a need for a specified period of time at the lowest premium. Provides a fixed, low premium in exchange for coverage which lasts a specified time period.
level term
Term life insurance that provides an annually decreasing face amount over time with level premiums. Usually used for mortgage protection. Has a death benefit that adjusts periodically and is written for a specific period of time. After the mortgage is paid off, the insurance policy will expire.
Decreasing term
is a limited benefit policies and purchased using a decreasing term life insurance policy, with the term matched to the length of the loan period and the decreasing insurance amount matched to the declining loan balance. can only be purchased for up to the amount of the debt or loan outstanding.
credit life policies
term life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount.
increasing term
provides temporary coverage that may be changed to permanent coverage without proof of insurability.
convertible term
term coverage that provides a level face amount that renews annually without proof of insurability.
annual renewable term
provides temporary level coverage at the lowest possible cost for a limited period of time, but then allows the policyowner to renew the policy to maintain coverage past the policys termination. does not have to prove insurability.
renewable term
covers children under their parents policy.
term - rider
insurance that provides death benefits for the entire life of the insured, provides living benefits in the form of cash values and it matures at age 100 and normally has a level premium.
whole life
types of whole life insuracnes
straight, limited pay, single-premium, modified, and graded
basic whole life insurance with a level face amount and fixed premiums payable over the insureds entire life. premium payments made until death of insured or age 100.
straight life
whole life insurance where the insured is covered for his entire life but premiums are paid for a limited time. as the premium payment period shortens, cash values.
limited pay life
allows the insured to pay the entire premium in one lump-sum and have coverage for the insureds entire life.
single premium whole life
low premiums in the early years and jumps to a higher premium in the later years and remains fixed thereafter. premiums increase just once.
modified whole life
the premium increases yearly for a stated number of years, then remains level.
graded whole life
design to insure all family members under one policy. the family head is covered by whole life insurance and the spouse/children are included on the same policy as family term riders.
family plan policies
provides income to a beneficiary for a selected period of time if an insured die during that period. at the end of the paying period, the beneficiary also receives the entire face amount of the policy. if an insured die after the end of the selected period, the beneficiary receives only the face value of the policy.
family maintenance policy
pays a benefit of double or triple the face amount if death occurs during a specified period. if death occurs after the period has expired, only the face amount is paid. combo of permanent insurance and level term insurance.
multiple protection policies
policy that covers two or more people. insureds are average age and a single premium is charged. uses permanent insurance and pays a death benefit when one of the insureds dies.
joint life policy
life insurance that covers a minor. payor provision is attached
juvenile insurance
designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid. normally issued in an amount not to exceed the outstanding loan balance and is usually paid entirely by the borrower. a decreasing term policy is most often used.
credit life insurance
the cash value can increase beyond the stated guarantee if economic conditions warrant. also called current assumption whole life insurance.
interest-sensitive whole life
distinguished by their flexibility that comes from combining term and whole life insurance into a single plan.
adjustable life policies
a variation of whole life insurance, characterized by considerable flexibility. allows the policyowners to determine the amount and frequency of premium payments which will adjust the policy face amount. flexible premiums, flex benefits, no minimum death benefit, and cash value withdrawals.
universal life
suggested premium used in universal life policies.
target premium
permanent life insurance policy that allows policyholders to tie accumulation values to a stock market index. gives the security of fixed universal life insurance with growth potential of a variable policy linked to indexed returns.
equity index of universal life insurance
EIUL
policy that is overfunded, according to the IRS tables. policies that do not meet the 7-pay test.
Modified Endownment Contracts
MEC
created to help offset the effects of inflation on death benefits. main difference from traditional whole life is the manner in which the policys values are invested. the policy values are invested in the insurers separate accounts which house common stock, bond, money market, and other securities investment options. basic characteristics are fixed premiums, a guaranteed minimum death benefit which fluctuates over the minimum, and cash values which fluctuate and are not guaranteed,.
variable life insurance
builds cash value. provides the policyowner with flex premiums, adjustable death benefits, a guaranteed minimum death benefit and gives the insured growth potential for higher returns, but also potential for loss.
variable universal whole life
VUL
