Types of Life Policies Flashcards
WHAT ARE THE CHARACTERISTICS OF TERM LIFE INSURANCE?
It provides temporary, pure death protection, with no cash value.
WHAT IS ANNUALLY RENEWABLE TERM INSURANCE?
Annually renewable term ART is the purest form of term insurance in which the death benefit remains level; the policy may be guaranteed renewable each year without proof of insurability, but the premium increases annually according to the attained age.
WHAT ARE THE CHARACTERISTICS OF WHOLE LIFE INSURANCE?
Permanent protection to the insured’s age 100, with living benefits such as cash value, policy loans, and non forfeiture options.
HOW DOES CONTINUOUS PREMIUM STRAIGHT LIFE DIFFER FROM 20 YEAR LIMITED PAY LIFE?
The premiums for straight life will be spread over the insured’s lifetime, thus enabling the insurance company to charge a lower annual premium. When the premium-paying period is condensed to 20 years, a higher annual premium is required.
WHAT ARE THE DEATH BENEFIT OPTIONS IN UNIVERSAL LIFE POLICIES?
Option A is the level death benefit option, and Option B is the increasing death benefit option
WHICH AUTHORITIES REGULATE VARIABLE LIFE POLICIES?
Variable life insurance products are dually regulated by the State and Federal Government: the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the State Department of Insurance.
HOW DO ANNUITIES DIFFER FROM LIFE INSURANCE POLICIES?
Annuities liquidate an estate (life insurance creates an estate). Annuities pay income to the annuitant while he or she is still living; life insurance pays the death benefit.
WHO HAS ALL OF THE RIGHTS IN AN ANNUITY CONTRACT?
The owner of the annuity has all of the rights such as naming the beneficiary and surrendering the annuity.
WHAT HAPPENS TO THE BENEFIT IF THE ANNUITANT DIES DURING THE ACCUMULATION PERIOD?
If the annuitant dies before annuitization (or payout period), his/her beneficiary will receive the amount paid into the plan or the cash value, whichever is greater.
AN ANNUITY HAS 2 DISTINCT PERIODS. WHAT ARE THEY CALLED, AND WHAT HAPPENS DURING EACH?
The accumulation period, also known as the pay-in period, is the period of time over which the annuitant makes payments (premiums) into an annuity. The annuity period, also referred to as the annuitization period, liquidation period, or pay-out period, is the time when money is distributed to the annuitant.
WHAT ARE THE 2 PREMIUM PAYMENT OPTIONS IN ANNUITIES?
Single premium and periodic premiums
HOW DOES INFLATION AFFECT THE PURCHASING POWER OF A FIXED ANNUITY?
Inflation can erode the purchasing power of income payments
HOW SOON CAN PAYMENTS BEGIN IN A DEFERRED ANNUITY?
In a deferred annuity, income payments begin sometime after one year from the date of purchase.
