Policies Flashcards
Three basic types of term insurance ?
- Level
- Increasing
- Decreasing
Face amount of the policy is ?
The Death Benefit
Death benefit is ?
The Face Amount
Why is Term insursance known as pure death protection ?
If the insured dies during this term the policy pays the death benefit to the beneficiary
What has no cash value nor other living benefits?
Term Insurance
What term insurance is the most common and has a death benefit that does not change throughout the life of the policy ?
Level Term
Its the purest form of term insurance. death benefit remains level and the policy may be guaranteed to be renewable each year with out proof of insurability but the premium increases annually according to the attained age?
Annually Renewable Term
Level premium Term
Provides level death benefit and a level premium during the policy term.
Term-to-65 Contract
Term insurance with level premium and level death benefits that is provided till the insured’s 65th birthday.
Decreasing Term
has a lower premium than level term, no cash value, and the face amount steadily declines through out the duration of the contract.
Indeterminate Premium
contains a provision that provides a current premium scale (non guaranteed) and a maximum premium scale ( guaranteed), beyond which premiums cannot be raised.
Key Characteristics of Whole Life Insurance?
- Level premium
- Death benefit
- Cash Value
- Living benefits
Three basic Forms of whole life Insurance?
- Straight whole life
- Limited-pay whole life
- Single premium whole life
Straight life (continuous premium)
- cash value increases
- premium stays level
- it is payed from the begining to the end
Limited Payment
- cash value builds up faster
- premiums are paid for a limited time
- insurance is payed up in a shorter period so the annual premium will be higher
Single Premium
provides a level death benefit to the insured’s age 100 for a one-time, lump-sum payment. Which is completely paid-up after one premium and generated immediate cash.
Graded Premium whole life
starts with a premium that is approximately 50% or lower than the premium of a straight life policy. The premium then gradually increases esach year for a period of usually 5 or 10 years and then remains level thereafter.
A policy that provides a guaranteed minimum interest rate along with a current and maximum guaranteed mortality charges, the performance of the policy is based upon the current interest rate being credited and mortality costs?
Current Assumption
Flexible Premium Policies
- adjustable life
- universal life
Adjustable life
- can be either term or permanent coverage
- insured determines how much voverage and amount of premium, the insurer then determines the appropriate type of insurance to offer
- as needs change the policyowner can make adjustments
Typically, the policyowner can make adjustments in his or her policy. Typically, the policyowner has the following options: (adjustable life)
- Increase or decrease the premium or the premium-paying period
- Increase or decrease the face amount
- Change the period of protection
- convert from term to whole life
- increases in the death benefit or changing to a lower premium will require proof of insurability
- can pay additional premiums above what is required to shorten paying-period and accumulate greater cash value
How does cash value develop on an adjustable life policy?
will only developo when the premiums paid are more than the cost of the policy
Universal Life
- able to increase amount of premium and later decrease it
- premium payments may be skipped if sufficient cash value has been attained
- if cash value is too small to pay premium the policy will expire
Premiums may be adjusted in a Universal Life so the policyowner is usually given what two choices to pay premium ?
- minimum premium
- target premium
What is the minimum premium and the
target premium?
- min: amount needed to keep the policy in force fot the current year . Policy will perform as an annually renewable term.
- Target: recommended amount that should be paid on a policy in order to cover the cost of insurance to keep the policy in force throughtout its lifetime.
