Term Life Insurance definition
Provides pure or temporary protection
The face amount is payable if the insured dies during a specified term
Provides the maximum amount of life insurance at the lowest initial outlay of funds
Premiums will increase with age
There is no cash value or equi
Level term insurance
Provides a fixed amount of coverage for as long as the policy remains in force
Level face amount
Increasing premiums with age
Decreasing term insurance
Coverage amount is reduced each year
Premium remains level or fixed
Straight Life Policy
Combination of death protection plus a cash value
What constitutes the cash value of a whole life policy?
Accumulated premiums paid plus a fixed interest rate which allows the savings to increase further during the policy year
Limited-payment whole life policies
The policy owner can cease paying premiums at the conclusion of the "limited payment period
Single-premium whole life
Lump sum or single premium payment
Extreme form of limited payment policy
Most expensive whole life policy initially, but is the least expensive is compared over the life of the contract
Modified whole life
An initial premium is lower than traditional whole life during an introductory period
After a specified period of time, the premium increases
Graded premium whole life
Starts with a lower premium than whole life in the early years of the contract
Premiums increase annually for the initial period
It then jumps to an amount higher than the whole life premium and remains fixed for life
Enhanced ordinary life
Aka Economatic life or extraordinary life
Low premium based participating permanent insurance policy
Indeterminate premium whole life
Provides low current premium costs for a specified period, then increases them
Current Assumption Whole Life (CAWL)
Interest sensitive whole life insurance
Either or low or high premium variety
Use an accumulation amount which is made up of the premium, less expense and mortality charges, and credited with interest based on current rates
Use a surrender charge, fixed a
Indexed whole life
Possesses a face amount which increases along with rises in the Consumer Price Index (CPI)
Endowments
Pay a death benefit to a named beneficiary upon the death of an insured during a specified "endowment" period
OR
Pays a cash value equal to the face amount of the policy at the end of the endowment period if the insured is still living
Combine life insura
Adjustable Life
Permanent insurance product that combines elements of traditional fixed premium whole life insurance with the potential to adjust the coverage or face amount based on the policy owner's changing needs
Universal Life
Allows the policy holder to change the coverage amount at his or her discretion
Utilizes changing interest rates in order to determine cash values
Flexible premium--can take money out of cash savings
Option A (level death benefit) and Option B (death bene
What type of policy would someone purchase if she wants to help their survivors pay off her mortgage in the event that she dies?
Decreasing term
At what age will a whole life policy owner's cash savings value equal the policy's face amount?
Age 100
If someone purchases a whole life death benefit of $50,000 with an income rider of twenty years that will pay $1,000/month, and that person dies 10 years after he buys this policy, what will be paid to his beneficiary?
$1,000/month for the next 10 years (20 years - 10 years of living) and then the $50,000 benefit
What portion of a mortgage redemption plan decreases annually?
The death benefit
A family policy is a combination of what two type of policies?
Whole life and level term
What are characteristics of a universal life policy?
Fixed interest paid on cash value
Adjustable death benefit
Transparency
Flexible premiums
What increases in a whole life policy with every successive premium payment?
Cash value
What type of life insurance policy's premium is initially lower than a traditional whole life plan and increases each year for an introductory period?
Graded premium whole life
What type of life insurance policy allows insurers to adjust premiums to reflect any changes in investment income?
Indeterminate premium whole life
What method of financing life insurance is best suited for individuals who are in higher tax brackets?
Minimum deposit insurance
If someone would like to purchase a whole life policy that will provide her with $30,000 in ten years, what type of policy would help accomplish this objective?
Ten year endowment
Who would be covered by a family rider?
A spouse
A natural child
An adopted child
(Note: a primary insured would not be covered)
What is the primary portion of an adjustable life policy that is adjustable?
The coverage amount
What type of license must a producer hold in order to engage in the sale of variable life insurance?
A life insurance license and a securities license
What type of policy covering a child is characterized by an increasing death benefit at a future age with no premium
Jumping juvenile policy
What type of life insurance is characterized by guaranteed coverage but provides no guarantees with regard to cash value build-up?
Variable life policy
What type of policy allows a person to increase or decrease the death benefit in the future?
Adjustable life policy
Interest sensitive whole life policies, such as universal life, use varying interest rates to determine what?
Cash values
What type of life insurance policy provides a policy owner with flexibility and control over the investment portion of the contract?
Variable life policy
What type of policy would you suggest your client purchase if she desires death protection and a cash value build-up but is presently of limited means?
Modified life