Types of Policies Flashcards
TARGET PREMIUM
PREVENTS POLICY FROM LAPSING.
RECOMMENDED AMOUNT THAT SHOULD BE PAI IN ORDER TO COVER COST OF INSURANCE PROTECTION AND TO KEEP POLICY IN FORCE
MORTALITY TABLES
USED TO PREDICT LIFE EXPECTANCY AND DEATH RATES FOR A SPECIFIC GROUP OF INDIVIDUALS
2 COMPONENTS OF A UNIVERSAL LIFE POLICY
INSURANCE AND CASH ACCOUNT
WHAT TYPE OF INSURANCE IS A UNIVERSAL LIFE POLICY
ANNUALLY RENEWABLE TERM
INTEREST SENSITIVE WHOLE LIFE
ALSO KNOWN AS CURRENT ASSUMPTION LIFE, IS A WHOLE LIFE POLICY THAT PROVIDES GUARANTEED DEATH BENEFIT TO AGE 100
UNIVERSAL LIFE DEATH BENEFIT OPTION A
LEVEL DEATH BENEFIT, INCREASING CASH VALUE
* THE DEATH BENEFIT WILL INCREASE AT A LATER DATE IN ORDER TO MAINTAIN A GAP BETWEEN THE CASH VALUE AND THE DB BEFORE THE POLICY MATURES
UNIVERSAL LIFE DEATH BENEFIT OPTION B
increasing death benefit (DB includes annual increase in cash value so DB increases by cash value)
Universal Life
The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium
Endowment
Because the cash value in an endowment has to build up faster since the funds are intended to be used while the insured is alive, the premium for an endowment is considerably more expensive than an ordinary straight life policy.
2 Types of Interest rates for Universal Policy
Guaranteed and Current. (The insurer credits the cash value in the policy with a current (non guaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.)
Variable UL “variable”
Variable UL “variable” refers to cash value and death benefit
There are three basic types of term policies:
level, increasing and decreasing.
