Type of Insurance Policies

Question 1

Industrial Life Insurance

Answer 1

Small premiums paid weekly to cover burial insurance

Question 2

Ordinary Life Insurance

Answer 2

aka straight-whole life insurance; made up of several different life insurances (term and whole),

Question 3

Group life insurance

Answer 3

made for members of a group, such as a company, using one mass contract

Question 4

Term life insurance

Answer 4

greatest amount of coverage for a small amount of time; has a TERMination date and is the cheapest; only pays for death benefits

Question 5

Level term

Answer 5

written to cover a need for a specific amount of time, i.e. the insured only wants coverage for the amount of employment left

Question 6

Decreasing term

Answer 6

death benefit adjusts periodically as the value of the item insured decreases in value (i.e., a car)

Question 7

Credit policies

Answer 7

made for the life of a loan, decreases in amount as loan also decreases; made by the borrower, and companies CANNOT require this

Question 8

Increasing term

Answer 8

increased amount over time based on percentages of original face amount

Question 9

Convertible term

Answer 9

allows insured to convert from their term insurance to premiant policies as the individual ages and becomes more financially independent without insurability, this can be added to a policy
INTERM: type of convertible that provides immediate protection, and is not permanent until insured can afford it. insurability is based on age when permanent protection begins

Question 10

Renewable term

Answer 10

a guarantee insured can renew their policy after its expiration date without proof of insurability; premiums increase at end of policy if renewed, and can be converted if this is included in policy
RE-INTRY: policy holder can keep current premium rate IF they prove insurability

Question 11

Annual Renewable term

Answer 11

term coverage provides level face amount which renews annually without proof of insurability

Question 12

Term rider

Answer 12

family, spouse, children under the primary policy holder

Question 13

Whole Life Insurance

Answer 13

death benefits for the entire life of insured; all types last until the age of 100, has fixed premiums, and level benefits with cash value (like buying a house)

Question 14

Whole life-Straight Life Insurance

Answer 14

premiums payable throughout insured’s lifetime until death

Question 15

Whole life-Limited Pay

Answer 15

premiums payed within a certain amount of time, and coverage continues after payments

SINGLE: when the policy is paid in full at first payment

Question 16

Whole life-Modified

Answer 16

Payments stay consistent for the first 5 years, then increase at year 6 and stays level until end of policy
GRADED: payments increase yearly

Question 17

Whole life-Modified Endowment Contract

Answer 17

Overpayment of premium, not a true life insurance policy according to the IRS

Question 18

Joint Life Policy

Answer 18

2 individuals covered using average of both ages, and the remaining individual gets the benefits if the other dies

Question 19

Joint Survivor/Last Survivor Life Policies

Answer 19

2 individuals covered using average of both ages, no one can access the policy until both are deceased

Question 20

Family Maintenance Policy

Answer 20

begins at date of death, whole life AND level term; provides a monthly income of beneficiaries for a set amount of time and a set face amount after death of the insured if death occurs during policy period. If death occurs after, then face value only is paid

Question 21

Family Income Policies

Answer 21

whole life AND decreasing term, begins at date of policy purchase; pay income to the family of insured beginning at policy date. If G buys a 20 year policy and dies in 10 years, the family receives the income for the remaining 10 years of the policy. Only face value paid to family if death occurred after termination date

Question 22

Adjustment life policy

Answer 22

premium payments adjust as insured’s financial status changes throughout the lifetime, more expensive than conventional or whole due to flexibility

Question 23

Universal life insurance

Answer 23

flexible premiums and adjusted death benefits usually go for cash value (i.e. the savings account); gives policy holder most control

different from whole life insurance, which has a fixed premium rate, fixed death benefits, and fixed rate of return (cash value)

Question 24

Variable life insurance policy

Answer 24

offsets inflation on death benefits; policy holder controls amount and time of premium payments, and investment of cash values in seperate accounts; seen as securities AND insurance product

Question 25

Equity index universal life insurance

Answer 25

combines term life with investment; 80-90% of premium is invested with fixed income while the remaining is invested in contracted stock index

Question 26

cash value

Answer 26

equity amount “savings” in a whole life policy

Question 27

cash value

Answer 27

equity amount “savings” in a whole life policy, amount policy owner will receive; as insured ages and the policy is paid off, the cash value begins to become surplus. This surplus is given at designated age

Question 28

face amounts plus cash value policy

Answer 28

promise to pay at the insured’s death face amount of the policy plus cash value

Question 29

Juvenile Insurance

Answer 29

written on lives of children of certain age under control of parents

Question 30

Non-medical life insurance

Answer 30

more expensive than medical, does not require a medical exam

Question 31

target premium

Answer 31

used in universal life policies; does not guarantee adequate funds

is the target the insurer has calculated in order to keep death benefits in force until target endowment age