Term Life Insurance
only provides coverage for a specific period of time and has no cash value; also known as "pure life insurance
Level term policy
In this policy, the death benefit remains level throughout the contracts life
Annual Renewable Term (ART)
Term policy that is renewable each year, premium increases with age of the insured
Level premium Term
Level term policy that also has a level premium
term-to-65
term policy that lasts until the insured is 65 years old
Decreasing Term Policy
Term policy where the premium remains level over the life of the contract but the death benefit decreases, used as insurance for mortgage or other debt
Permanent Life Insurance (Whole life)
a general term used to refer to various forms of life insurance policies that build cash values and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid
Characteristics of whole life insurance
- level premium
- death benefit
- cash value
- living benefits
Straight life
type of whole life policy where the policyowner pays the same premium from the time the policy is issued until the insured's death or age 100 whichever is first
Limited payment
type of whole life policy where the policyowner pays the same premium from the time the policy is issued until a date well before age 100, premiums in this policy will be higher than in straight life
single premium whole life policy
type of whole life policy where the policy is completely paid up after one premium and it generates immediate cash; most companies require a minimum premium for this policy
indeterminate premium whole life policy
policy specifies two premium rates - a guaranteed maximum and a non-guaranteed minimum; the non-guaranteed minimum rate is paid for 2 or 3 years after which the insurer changes the premium base on the company's expected mortality, expenses, and investment
interest-sensitive whole life
also called "current assumption"; a fixed premium whole life policy that credits the cash value with the current interest rate that is usually comparable with the money market rates
Adjustable life insurance
combines term and permanent coverage, the insured typically decides how much coverage is needed and the affordable premium; as the insured's needs change the policowner can make adjustments in his/her policy
universal life insurance
also known as flexible premium adjustable life; the policy owner has the flexibility to increase the amount of premium going paid into the policy and then to later decrease it again; this policy is also and interest- sensitive policy
option A (level death benefit)
death benefit option of a universal life policy, in this option the death benefit remains the same while the cash value gradually increases which lowers the pure insurance in later years
option B (increasing death benefit)
death benefit option of a universal life policy, in this option the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount the cash value increases
Joint life policy (First-to-die)
single policy that is designed to insure two or more lives; can be in the form of term or permanent policy; it functions like an individual whole life policy except that the premium is based on the joint average age and that the benefit is paid upon the f
Survivorship life policy (Second-to-die)
Single policy for two lives, the death benefit is paid after the second death therefore the premium is based off of an "extended" life and will be lower than a Joint Life Policy; used to offset the liability of estate tax
final expense/ pre-need insurance
life insurance used to fund funeral expenses, details of funeral are arranged in contract; usually a single premium whole life policy
characteristics of concern to an underwriter for Group Life Insurance
- purpose of the group (cannot be to obtain group insurance)
- size of the group
- turnover of the group
- financial strength of the group
credit life insurance
type of life insurance owned by creditor to insure the life of a debtor and pay off the balance of the loan in case of premature death