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Life Insurance > Types of Life Policies > Flashcards

Types of Life Policies Flashcards

1
Q

Term Insurance

A

Temporary protection for specified amount of time

Greatest coverage, lowest premium

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2
Q

Pure Death Protection

A
  • If insured dies, beneficiary is paid
  • If policy is cancelled/ expired prior to death nothing is paid
  • No cash value or other living benefits
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3
Q

Level Term Insurance

A

Most common

Death benefit does not change

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4
Q

Annually Renewable Term

A

Death benefit remains level

Premium increases yearly, with age

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5
Q

Decreasing Term

A

Level premium
Decreasing death benefit
* When it’s time sensitive or decreases over time, payments of mortgages or other debts

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6
Q

Increasing Term

A

Level premium

Increasing death benefit (specified amount or %)

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7
Q

Return of Premium (ROP)

A

Increasing term
Pays additional benefit to beneficiary equal to amount of premiums paid
Return of premiums if death occurs within a specific period or insured outlives term

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8
Q

Renewable Provision

A

Policyowner can renew coverage at expiration date without evidence of insurability. Premium based on the current age of when renewed.

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9
Q

Convertible Provision

A

Policyowner can convert policy to a permanent policy without evidence of insurability.
Based on current age.

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10
Q

Permanent whole Life Insurance

A

Builds cash value - can borrow against but any outstanding loans/ interest is deducted at death
Defer payment
In effect entire life (or 100)

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11
Q

Whole Life Insurance

A

Value of the accumulated premium scheduled to equal the face amount of the policy by age 100.

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12
Q

Ordinary (Straight) Life

A

Continuous premium for whole life

Lowest annual premium

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13
Q

Limited Pay Life

A

Premiums completely paid by age 65

Higher premium

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14
Q

Single Premium Whole Life

A

Level death benefit until death

Single, lump-sum payment

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15
Q

Adjustable Life

A

Term or permanent insurance - can convert
- Higher benefit or lower premium require proof of insurability
Insured determines the coverage and premium
Changes as needed
Cash value when premiums are more than the cost of the policy

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16
Q

Interest-Sensitive Whole Life

A 
Also known as Current Assumption Life
Fixed premium for whole life
Credits cash value with current (nonguaranteed) interest rate
Comparable to money market rates
Minimum interest
17
Q

Variable Whole Life

A

Fixed premium
After dump loads, policyowner allocates premiums into separate acct
Death benefit and cash value aren’t guaranteed, fluctuates with sub acct

18
Q

Universal Life

A

Also known as flexible Premium Adjustable Life
Policyowner can increase premium and then decrease
Can skip paying as long as there is sufficient cash value at the time of payment

19
Q

Universal Life: Option A, Level Death Benefit

A

Level death benefit

Gradual increase in cash

20
Q

Universal Life: Option B: Increasing Death Benefit

A

Annual increase in cash, subject to inflation

Pure insurance remains level for life

21
Q

Variable Universal Life

A 
Flexible Premiums
Adjustable death benefit
Policyowner decides where net premiums are invested
Cash values aren't guaranteed
Death benefit isn't fixed
22
Q

Equity Indexed Life

A

Cash value dependent on performance of equity index
Minimum cash value guaranteed
Fixed premium
Guaranteed death benefit

23
Q

Joint Life

A

One policy, two or more lives
Joint average age
Death benefit paid on FIRST death ONLY
No longer insured after first death

24
Q

Survivorship Life

A

Pays on last death
Premium on joint age
* to offset liability of estate tax upon death

25
Q

Nonforfeiture value (Accumulation value): Annuities

A

Can be withdrawn prior to annuitization date
If within the first 10 years:
- withdrawal/ surrender charge that decreases every year

26
Q

Fixed Annuity

A 
Guaranteed minimum interest
Steady income payments
Specified payment amount
Specified payment period
Could be affected by inflation
27
Q

Level Benefit payment amount

A

Can be affected by inflation

28
Q

Variable Benefit payment amount

A

Placed in a separate acct
- accumulation units are purchased in the fund
- upon annuitization converted to annuity units
Return varies as accts vary
No minimum interest rate

29
Q

Indexed (equity) annuities

A

Fixed
Aggressive investment for high returns
Guaranteed minimum interest
Insurance companies keep the initial returns

Life Insurance (6 decks)

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