LIFE INSURANCE POLICIES Flashcards
issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.
Industrial Life Insurance
life insurance of commercial companies not issued on the weekly premiums basis. It is made up of several types of individual life insurance, such as temporary (term), and permanent (whole).
Ordinary Life Insurance
insurance written for members of a group, such as a 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.
Group Life Insurance
gives you the greatest amount of coverage for a limited period of time. An inexpensive type of insurance making it an attractive option for large policies. Provides a pure death protection since it only pays a death benefit if the insured dies during the policy term
Term Life Insurance
has a level face amount and level premiums. Premiums tend to be higher than annual renewable term because they are level throughout the policy period. However, the premiums will increase at each renewal. 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 that lasts for a specified time period
Level Term
Life insurance that provides an annually decreasing face amount over time with level premiums. These policies are usually for mortgage protection. Life policy which has a death benefit that adjusts periodically and is written for a specific period of time.
Decreasing Term
typically purchased using a decreasing term life insurance policy with the term matched to the length of the loan period and the decreasing insurance amount is matched to the declining loan balance
Credit Policies
life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount
Increasing Term
provision that allows policy owners to convert their term insurance in to permanent insurance without showing proof of insurability. When converting, your age is typically re-evaluated to your current age which would cause premiums to increase
Convertible term
insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.
Renewable term
term coverage that provides a level face amount that renews annually, guaranteed renewable annually without proof of insurability
annual renewable term
type of life insurance product which covers children under their parent’s policy. Family plan policies usually cover the head of the family with permanent insurance, and coverage on the spouse and children would be term. Always level term.
Term rider
provides death benefits for the entire life of the insured. Also provides living benefits in the form of cash values. Matures at age 100 and normally has a level premium. has a fixed premium and level benefit cash value accumulation, regardless of how it is paid. often compared to BUYING
Whole Life Insurance
premiums are payable throughout the insured’s lifetime, and coverage continues until insured’s death. Premiums are payable as long as coverage is in force. Pays out at death or age 100. allows you to maintain coverage throughout your whole life and spread cost throughout lifetime
whole life- straight insurance
covers an insured’s whole life with level premiums paid over a limited amount of time
Whole Life- Limited Pay
premium stays fixed for the first 5 years, increases in year 6 and stays level for the remainder of the policy
Whole Life- Modified
policy that exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract. A MEC does not meet the 7-pay test and is considered over-funded by the IRS. For that reason, the policy will lose favorable tax treatment
Whole Life- Modified Endowment Contract (MEC)
Covers the lives of two individuals and save of premium cost by averaging the ages of the two insureds. pays face amount after the first person on the policy dies
joint life policy
covers lives of two individuals and saves on premium costs by averaging the ages of the two insureds. only pays death benefit when the last of the two dies
Joint or survivor life policy
pays monthly income from the date of death of the insured to the end of the preselected period of time plus face amount of policy at the end of that time period
family maintenance policy
pays an income at the beginning of the insured’s death and continues from a period specified from the date of policy issue
Family income policy
offers flexible premiums. combines whole life and term life into a single plan
adjustable life policy
flexible premiums and adjustable death benefit. investment gains go toward the cash value. policy owner can use the cash value to manipulate the flexible aspects of this type of policy. most options/most control
universal life insurance policy
requires producer to have proper FINRA and National Association of Securities Dealers (NASD) securities registration prior to selling this type of policy contract, whether it be life insurance or an annuity, as they include regulated securities. AKA as interest-sensitive policies. Usually have a fixed level premium but. ash value/death benefits can fluctuate according to the performance of its underlying investment portfolio. This type of account grows through mutual funds, stocks, and bonds. This type of policy offsets inflation
variable life insurance policy
policy owner controls investment of cash values, and selects the timing and amount of premium payments. can control how much and when premium is due
variable universal whole life
combines most of the features, benefits, and security of traditional life insurance with the potential of earned interest based on the upward movement of an equity index. unlike a traditional whole life plan, this plan allows policy holders to link accumulation values to an outside e=equity index like S&P 500. 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulation stock index
Equity Index Universal Life Insurance
when the insured dies, the policy owner (investor) benefits. An investor purchases a policy on the life of someone else to profit upon that person’s death. Usually, this is in exchange for a monetary living benefit for the insured. These policies are illegal as they are designed to circumvent the interest requirements of an insurance contract and position the policy owner to benefit upon the death of the insured
Investor (or stranger) originated life Insurance policy
the equity amount or “savings” accumulation in a whole life policy
cash value
contract for providing payment of the face amount at the end of a fixed period, at a specified age of the insured, or at the insured’s death before the end of the stated period
Endowment Policy
contract that promises to pay at the insured’s death the face amount of the policy plus a sum equal to the policy’s cash value
face amount plus cash value policy
written on the lives of children who are within specified age limits and under parental control
juvenile insurance
typically doesn’t require a medical exam and tends to be more expensive than medically underwritten policies. insurer will average out everyone’s risk and charge accordingly
non-medical life insurance
a suggested premium used in universal life policies. Doesn’t guarantee there will be adequate funds to maintain the policy to any time, especially to life. may give indication of what will be needed (under conservative estimate) to maintain the policy
target premium
