Unit 4- Types Of Life Insurance Policies

Question 1

Level term insurance (think plateau coverage

Answer 1

• Death benefit is level

- Premium is level for the term

Question 2

Decreasing Term( think shrinking glacier)

Answer 2

Death benefit decreases

-Premium remains level

Question 3

Return of premium term( think return or refund money)

Answer 3

• Premium is higher than regular tem policy

- Premium paid by insured is paid back if insured is alive at the end of the term.

Question 4

Renewabilty (think extended reach)

Answer 4

• policy will renew or extend at the end of term
• Dont have to reapply or qualify medically for coverage
• Term will be the same as as when 1st purchased
• Premiums based upon attained age

Question 5

Convertibility

Answer 5

• Can be changed to permanent insurance
• No new application required to do this
• Convertible must be made before term expires(ends)

Question 6

Traditional Whole Life (Think ⬆️ overpay when younger ⬇️ underpayment when older)

Answer 6

Fixed premium
-Fixed and level death benefit
(Fixed and level payment and the policy remains the same and in force.) [Think..level plateau and paid on set date “Fixed “

Question 7

Cash value( think snapshot of what your will be paid and how you’re paid)

Answer 7

They reflect the means of payment if the guaranteed death benefit.

Question 8

Guaranteed Interest crediting (📈 think going up a slope&withdrawn)

Answer 8

Cash value goes up over the life of the contract and regularly credited.

Question 9

Policy Surrender (Think..hands up! Surrender and give up!)

Answer 9

Policyholder gives up “surrenders” the contract and reclaims a share of the reserve fund of policy.
-Cashing in a policy, the policy owner gives up the death benefit.

Question 10

Policy loans (think..borrow money from insurance policy.)

Answer 10

Cash surrender value a.k.a policy loan allow policyholder to borrow up to cash value of policy.

• Endows at age 100.
• The policy and death benefit stay in force and interest must be paid on the borrowed amount.
• If policy loan has not been paid back and the policyholder dies, the borrowed amount plus any interest is taken from the policy’s death benefit.

Question 11

Death benefit

Answer 11

• Amount at risk to the company

- Plus cash values

Question 12

Types of Whole Life Policies( 7 types listed after the three mentioned here)

Answer 12

▪︎Continuous premium
▪︎Limited payment
▪︎Single premium
-Immediate cash values

Question 13

Modified Premium

Answer 13

• Lower premium the first three to five years

- Premium increases for 5 to 10 years then levels off.

Question 14

Indeterminate Premium

Answer 14

• Premiums adjusted by the company

- Has guaranteed maximum premium

Question 15

Interest Sensitive

Answer 15

• Has current interest rate

- Guaranteed interest rate

Question 16

Flexible Policies (3 variations to the policy) A.L , U.L., E.I.U.L

Answer 16

▪︎adjustable life
-Policyowner,adjusts the death benefit
-Increase requires proof of insurability
▪︎adjusts the premium

Question 17

Universal Life

Answer 17

-Flexible premium
-Cash account
▪︎Cost of insurance withdrawn monthly
▪︎Fees withdrawn monthly
▪︎Current or guaranteed interest
-Option A level death benefit (insurance amount only)
-Option B- increasing death benefit (insurance amount plus cash amount)

Question 18

Equity indexed universal life

Answer 18

• Current interest on cash account
  ▪︎Up or down based upon a stock market index
  ▪︎Account still guaranteed by the company.

Question 19

Variable Policies

Answer 19

▪︎Life insurance plus investments
▪︎Must have life insurance license & securities license
▪︎Investments are in the separate account (securities)
-Owner can loose money

Question 20

Types of Variable policies (2 types)

Answer 20

Variable life
▪︎Death benefit can increase
▪︎Has guaranteed death benefit
Variable universal life
-No guaranteed death benefit

Question 21

Specialized policies (only 2)

Answer 21

▪︎Joint life
-First to die
-Second to die (survivorship life)
▪︎Juvenile 
-Jumping Juvenile 
▪︎Policy automatically increases at age 18 or 21