Policy Features Flashcards
True or Fales
A jumping juvenile policy’s face amount will automatically increase when the child reaches age 18 or 21 with no increase in premium.
True) These are often called jumping juvenile policies. Some policies may increase in face value up to five times the original amount.
survivorship life policy
- second-to-die or last-to-die
- insures two individuals
- pays death benefit at the death of the second insured
- cost less than purchasing two individual policies
- can provide money for estate settlement costs and related expenses
Name the policy
- adjustable premiums
- insurer charges premium based on its current estimate of investment earning, mortality, and expense costs;
- premium will never be adjusted above maximum guaranteed premium stated in policy
indeterminate premium whole life policy
Premium options for a converted term policy are
attained age: insured’s age at the time of conversion or,
original age: policy holder will pay lump sum that equals what the cash value would have been if a permanent policy was originally purchased
This feature allows policyholder to convert term insurance to permanent coverage without evidence of insurability or an application.
convertability
Renewability
guarantees that policy will renew (extend) at the end of its term; does not require new application nor proof of insurability; same death benefit with new, higher premium based on attained age
cross-purchase plan
each partner or shareholder owns a policy on the lives of each of the other partner; surviving owners purchase deceased owner’s business interest
buy-sell agreement
purchaser of a deceased business owner’s business interest is the business entity itself; the business entity owns a policy on the life of each business owner; typically used for partnerships or non-incorporated businesses
stock redemption plan for corporations
entity plan
buy-sell agreement
Permanent life insurance with separate account and flexible premiums. Does not have guaranteed minimum death benefit.
Variable universal life
flexible premium variable life
The death benefit of a variable life policy will
fluctuate with investment performance but, it will never decrease below the guaranteed minimum death benefit.
Variable life insurance is also referred to as
variable whole life or fixed-premium variable life
What is one disadvantage of term life insurance?
It does not accumulate cash value.
True or False: The premiums for variable life insurance can change based on the policyholder’s investment choices.
True
What type of insurance allows policyholders to take loans against their policy’s cash value?
Whole life insurance and universal life insurance
Fill in the blank: Whole life insurance is often considered a form of ______ planning.
permanent
Which type of life insurance is best for temporary coverage needs?
Term life insurance
What is a major advantage of universal life insurance?
Flexibility in premiums and death benefits.
True or False: Variable life insurance has no cash value component.
False
Which type of insurance typically includes a guaranteed death benefit?
Whole life insurance
What happens to term life insurance when the term expires?
Coverage ends unless renewed or converted.
Fill in the blank: In variable life insurance, the death benefit can fluctuate based on the performance of ______.
investments
True or False: Universal life insurance allows for adjustments in premium payments.
True
What is a key feature of term life insurance?
It provides coverage for a fixed term without cash value.
Which life insurance type is generally considered more expensive over time?
Whole life insurance
What type of life insurance can accumulate cash value based on investment performance?
Variable life insurance
True or False: Whole life insurance premiums remain level for the life of the policy.
True
Which type of life insurance typically has the lowest initial premium?
Term life insurance
What is the primary characteristic of universal life insurance?
It offers flexible premiums and death benefits.
Fill in the blank: Variable life insurance allows policyholders to choose how their cash value is ______.
invested
True or False: Whole life insurance has a cash value component.
True
What type of life insurance provides coverage for a specific period of time?
Term life insurance
