Types of Life Policies Flashcards
cash value
a policy’s savings element or living benefit
deferred
withheld or postponed unit a specified time or event in the future
endow
to have the cash value of a whole life policy reach the contractual face amount
face amount
the amount of benefit stated in the life insurance policy
fixed life insurance products
contracts that offer guaranteed minimum or fixed benefits
lapse
policy termination due to nonpayment of premium
level premium
the premium that does not change throughout the life of a policy
nonforfeiture values
benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
policy maturity
in life policies, the time when the face value is paid out
securities
financial instruments that may trade for value
variable life insurance products
contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
term insurance
provides the greatest amount of coverage for the lowest premium
no cash value
level term insurance
the most common type of temporary protection purchased. the word level refers to the death benefit that does not change throughout the life of the policy
level premium term
provides a level death benefit and a level premium during the policy term
credit life
the most often sold by lenders and is term insurance written with a face amount and term that is matched to the amount and length of the loan period
credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor
adjustable life
the owner of an adjustable life policy has the following privileges:
increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection
modified life
charge lower premiums (similar to term rates) during the first few policy years, 3-5 years, and then higher level premiums for the remainder of the insured’s life. the higher subsequent premiums are typically higher than straight life premiums would be for the same age and amount of coverage
group life insurance
written as a master policy, issued to the sponsoring organization, covering the lives of more than one individual member of that group. in group insurance, individual participants typically do not need to provide proof of insurability
receive a certificate of insurance from the master policy when individuals are covered by group life insurance
universal life option b
under option b the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. at any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value
graded-premium whole life
when graded-premium whole life policy begins, the premium amounts are typically 50% lower than premiums for straight life policies. the premium then gradually increases each year for a period of usually 5-10 years and then remains level thereafter
straight whole life
policies have a level guaranteed face amount and a level premium for the life of the insured
payor benefit
only pays if the owner, is disabled for at least 6 months
annually renewable term (ART)
the purest form of term insurance. the death benefit remains level (in the sense, it’s a level term policy) and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as the probability of death increases
