Annuity
A contract that provides a regular income for as long as the person lives.
Beneficiary
A person designated to receive something, such as life insurance proceeds, from the insured.
Cash Value
The amount received after giving up a life insurance policy.
Chartered Life Underwriter (CLU)
A life insurance agent who has passed a series of college-level examinations on insurance and related subjects.
Double Indemnity
A benefit under which the company pays twice the face value of the policy if the insured's death results from an accident.
Incontestability Clause
A provision stating that the insurer cannot dispute the validity of a policy after a specified period. (Usually 2 years.)
Interest-Adjusted Index
A method of evaluating the cost of life insurance by taking into account the time value of money.
Non-Forfeiture Clause
A provision that allows the insured not to forfeit all accrued benefits.
Non-Participating Policy
Life insurance that does not provide policy dividends; also called a nonpar policy.
Participating Policy
Life insurance that provides policy dividends; also called a par policy.
Rider
A document attached to a policy that modifies its coverage.
Suicide Clause
A provision stating that if the insured dies by suicide during the first two years the policy is in force, the death benefit will equal the amount of the premium paid.
Term Insurance
Life Insurance protection for a specified period of time; sometimes called temporary life insurance.
Universal Life
A whole life policy that combines term insurance and investment elements. The increase in the cash value reflects the interest earned on short-term investments.
Whole Life Policy
An insurance plan in which the policyholder pays a specified premium each year for as long as he or she lives; also called a straight life policy, cash value life policy, or ordinary life policy.
The amount of your premium depends primarily on the age at
Policy Divdend
The Refund. A participating policy has a somewhat higher premium than a nonparticipating policy, but a part of the premium is refunded to the policyholder annually.
Multiyear Term Life
Most popular form of term insurance gurantees that you will pay the same premium for the life of your policy.
Return-of-Premium (ROP)
Money-Back term policies refund every penny you paid in premiums if you outlive the term of the policy. ROP policies cost 30 or 50% more than traditional term life.
Adjustable Life Insurance
You can change such a policy as your needs change. If you want to increase or decrease your coverage, you can change either the premium payments or the period of coverage.
Relatively recent type of whole life insurance.
Group Life Insurance
Insures a large number of persons under the terms of a single policy without requiring medical examinations. A form of term insurance.
Endowment Life Insurance
Coverage from the beginning of the contract to maturity and guarantees payment of specified sum to the insured, even if he or she is still living at the end of the endowment period.
Face Value of the policy is paid to beneficiaries upon the death of the i
Credit Life Insurance
Used to repay a personal debt should the borrower die before doing so.
Grace Period
Allows 28-31 days to elapse, during which time you may pay the premium without penalty.
After that time, the policy lapses if you have not paid the premium.
Policy Loan Provision
Permits you to borrow any amount up to the cash value of the policy. However, a policy loan reduces the death benefit by the amount of the loan plus interest if the loan is not repaid.
If your death would cause financial stress for your dependents, you should consider purchasing life insurance.
True
Stock life insurance companies are owned by their policyholders.
False
Because the premium payment period for a limited payment policy is shorter than that of a whole life policy, the annual premium is higher.
True
Which of the following is (are) false?
You can expect to receive a policy dividend from a stock company
Which statement is correct about whole life insurance?
It builds up cash value
Tim Bridges has a life insurance policy where he makes payments of $265 per year until he reaches the age of 65. His policy is then 'paid up' for life. His beneficiaries will receive the face value upon his death. What type of life insurance does Tim like
limited payment life
After you buy new life insurance you have a "free look" period of ______ days.
10
John Camey has a life insurance policy that is tied to a separate stock fund. The cash value of his insurance policy depends on the value of this fund. He is guaranteed a minimum death benefit but the death benefit can be higher, depending on the value of
variable life