Unit 4 Types of Life Insurance Policies Flashcards
face amount
amount of the death benefit. usually found on the first page of the policy
living benefits
financial benefits that are available while the insured is still alive
characteristics of term insurance
-level term
-decreasing term
-increasing term
-return of premium term
-renewability
-convertibility
level term policy
equals the face amount throughout the term of coverage. premium also remains level during the term
decreasing term policy
death benefit declines over the coverage period until it reaches the end of the term. premium remains level
increasing term policy
death benefit begins near zero and grows over the term of the coverage. premium increases
return of premium term
premium higher than regular term policy. premium paid by insurance is paid back if insured is alive at the end of the term
renewability
guarantees the policy will renew at the end of the term. no new medical exam/ application. new premium based on attained age
attained age
insured’s age at time of conversion
step-rate premium
a higher premium at each renewal
convertability
allows a policyholder to convert a term insurance policy to a permanent type of policy. no application and no evidence of insurability required
whole life insurance
permanent insurance policy guaranteed to remain for the insured’s entire lifetime
has a level premium (does not increase), payments can be made on a fixed premium schedule (ex. monthly), death benefit is fixed and level (face amount remains the same), has a cash value (reserves necessary to assure payment of the guaranteed death benefit), death benefit
types of whole life policies
-continuous premium
-limited payment
-single premium (immediate cash value)
-modified premium (lower premium first 3-5 years, premium jumps once then levels off)
-graded premium (initial premium lower than whole life, premium increases for 5-10 years years then levels off)
-indeterminate premium (premiums adjusted by the company, has a guaranteed maximum premium)
-interest sensitive (has a current interest rate, guaranteed interest rate)
continuous premium whole life
a type of whole life insurance where the premiums are the same each year for the duration of the contract
limited-payment whole life
a type of whole life insurance that allows for a lifetime of premiums to be paid in a shorter time. accumulates faster than a continuous premium
