Types of policys Flashcards
What happens if you stop paying a term policy
Cover ends
Do term life policies have a surrender value?
No
When does a level term policy payout?
The company pays out a fixed amount if the person dies before the expiry date
Do premiums change in level term?
no
What is the cheapest type of policy?
Level term policy
What is unique about a renewable term policy
It can be renewed without proof of health.
Do premiums change in a renewable term?
Yes as risk profile changes to prevent adverse selection
Convertible term
Can be converted into whole of life or endowment
Decreasing term cover
Covers an amount that decreases over time so eventually, the sum insured is zero
Do decreasing term policy’s premiums change?
no
Index-linked term insurance
The amount insured increases every year and is link to an index (usually inflation)
Do premiums increase in an index-linked policy?
Yes usually more than inflation/index
What situation is an index-linked policy useful?
Short term
Family income benefits
It covers the income of a family member, if they die it pays out that weekly allowance until the policy expires
Why does the sum insured decrease in a family income benefit policy?
Because every week the number of allowances that the insurance company has to pay out reduces.
