Types of Life Insurance Flashcards
Industrial Life
Insurance issues very small face amounts, such as 1,000 or 2,000. Premiums are paid weekly and collected by debit agents. They were designed to cover burial costs.
Group Life
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. One of the benefits of group life coverage is usually there is no evidence of insurability required.
Ordinary Life
Made up of several types of individual life insurance, such as temporary (term), and permanent (whole).
Term Life
Gives you greatest amount of coverage for a limited period of time. Cheapest type of life insurance. Often renewal and convertible. Price of premium will most likely raise after renewal.
Level Term
AKA level premium, 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. Premiums will increase each renewal.
Credit Policies
Typically purchased using a decreasing term life insurance policy, with the term matched to the length of the loan period. Designed to cover the life of a debtor and pay the amount due on a loan.
Whole Life
Insurance that provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. It matures at age 100 and normally has a level premium.
Whole Life Insurance
Provides both living and death benefits. Provides permanent life insurance protection for the insureds entire life. It also provides benefits such as cash value and policy loans.
Straight Life
This is basic whole life insurance with a level face amount and fixed premiums payable over the insured’s entire life. Premium payments made until death of insured or age 100 (maturity of policy).
Limited Pay Life
Whole life insurance where the insured is covered for their entire life, but premiums are paid for a limited time. As the premium payment period shorten, cash values increase faster and fixed premiums are higher.
Single Premium Whole Life
Allows the insured to pay the entire premium in one lump-sum and have coverage for the insured’s entire life.
An immediate nonforfeiture value is created
An immediate cash value is created
A large part of the premium is used to set up the policy’s reserve.
Modified Whole Life
Low premiums in the early years and jumps to a higher premium in the later years and remains fixed thereafter. Premiums increase once.
Graded Whole Life
Under a typical graded premiums life insurance policy, the premium increases yearly for a stated number of years, then remains level. Premiums continue to stay level for remainder of the policy.
Family Plan Policies
These are designed to insure all family members under one policy. Usually the family head is covered by whole life insurance and the spouse/children are included on the same policy as level term life riders. spouse term plan is usually convertible to whole life. Children term are usually convertible at 18 or 21 without proof of insurability.
Interest-Sensitive Whole Life
Type of whole life insurance where the cash value can increase beyond the stated guarantee if economic conditions warrant. Premiums can vary to reflect the insurer’s changing assumptions with regard to its death, investment, and expense factors.
