Life Insurance Policies - Chapter 4 Flashcards
6% Chapter 4
What is the free look period for a replacement policy?
20 days
Do whole life policy premiums increase with age?
No
Whole life policy premiums are based on issue age only and remain level for the life or until the end of the premium period
How long is the payment on a straight whole life policy?
The payment is for life and endows at age 100
When does a joint life policy pay?
Pays entire face amount upon 1st death only
1st to die
What’s the maximum coverage for a group like policy to avoid tax liability?
$50,000 is the maximum and employer can pay for a group live policy without creating a tax liability
How long does a group member have to convert his coverage after leaving the group?
31 days
Which policy stays in effect without premium payment as long as there is a catch value?
Universal life
Premiums not required as long as cash value will cover the expense
Which is more expensive a joint life Or the purchase of 2 separate individual whole life policies?
The premiums for joint life is less than the combined premiums of 2 individual policies
What policy provides protection after the premium period has ended?
Limited pay whole life.
When does a survivorship or a second to die policy pay?
Survivor ship or 2nd to die policy covers 2 people only pays on the 2nd death
What is a key employee life insurance policy?
The business is the applicant and policy holder as well as the beneficiary and the employee is insured
What is the coverage amount of life insurance policy called?
Face value or death benefit
What are the types of life insurance policies?
Term life Whole life Flexible premium Specialized Group life
What are 3 types of term insurance?
Level
Decreasing
Increasing
** Regardless of plan..Premiums always remain level for the term of coverage **
What are the 2 types of level term insurance?
Renewable
Convertible
What is the benefit of a renewable term policy?
Renewable without proof of insurability - Guaranteed renewable based on current age rated
What is the attained age?
The current age at time of renewal
What is the benefit of a convertible term policy?
Policy can be converted to whole life without evidence of insurability.
What is a level premium term?
The policy has a level premium for the term of coverage
What is decreasing term insurance?
Palace recovered to decrease his overtime until it gets to 0
Most affordable
What are 2 benefits of whole life insurance?
Guaranteed death benefit and cash value
What is a continuous premium or a straight whole life?
Premiums paid until insured dies or turns 100
Lowest premiums
What is a limited payment life?
Payments for a limited period (10, 15, 20 years) or to an age such as 65 then it’s considered paid up no further payments
What is single premium life?
Policy is paid with one single premium.
Most expensive
Surrender charge if withdrawals within the 1st 7 to 10 years
Can premiums or payments be changed during during a whole life policy?
No
What are the 2 types of lexible premium policies?
Adjustable life
Universal life
What can be changed on an adjustable life insurance policy?
Policy owner can change premium’space amount or basic type of insurance
May require proof of insurability
What is the universal life insurance policy?
Policy owner can increased premiums
reduce premiums or
pay no premiums as long as there’s enough cash in the policy to cover the up the cost of the policy
What are the 3 components to a universal life policy?
Morality
Interest
Expenses
The 3 are unbundled for flexibility
What are the 2 types of rates a universal life policy guarantees?
Guaranteed rates
Current rates
