When does a whole life policy mature?
When the insured reaches age 100
-Premiums are paid to age 100 or to time of premature death
-Insurers assume the insured will not live to age 100
What values does a whole life policy build?
Cash, loan, and non-foreiture
Pure insurance protection
The face value minus the cash value
As the cash value increases, _________________ decreases, but the face amount would stay the same
Borrow
The policyowner may do this from the cash value of the whole life policy
-may carry a fixed or variable interest rate
Nonforfeiture
_____________ values are available to the policyowner if the policy lapses due to nonpayment of premium.
-each policy contains a table showing the value of these benefits
Whole life policies have a level premium and face amount
Premiums will be more than the cost of the policy in early years and less than the cost in later years
The shorter the premium paying period, the higher the premium
-a Limited Pay Life of 20 yrs has a higher premium than a Straight Whole Life
Settlement options
Available upon the death of the insured or the maturity of the policy
When does the cash value equal = the face value?
Age 100 (the policy's maturity)
Term
You may add a __________ RIDER to a whole life policy, but you cannot CONVERT a whole life policy to a __________ policy.
Ordinary (Straight) Life (Continuous Premium or Permanent Life)
Both the premium and the face amount (death benefit) remain level to age 100, or the death of the insured, whichever comes first.
Limited Payment
Premium payments are for a specified time (such as 20-pay, 30-pay, or to age 65); however, the the face amount (death benefit) remains level to age 100.
Single Premium
The entire cost of the policy is paid at the time of purchase and the face value remains level to age 100.
What is the difference between limited payment whole life policy and single premium whole life policy?
The premium structure
Indeterminate Premium
Specifies 2 premium rates: A guaranteed maximum, and a lower rate the insured actually pays.
The lower premium level is for a set period of time, then the company establishes a new rate. The new rate may be higher or lower than the initial premium, but ca
Current Assumption (Interest Sensitive) Whole Life
A Straight Whole Life policy with the following variations:
-flexible premiums, with adjustments made on a specific anniversaries, specified by the insurer
-the face amount (death benefit) does not fluctuate
-the (current) interest rate is higher than the
Enhanced Ordinary Life (Economatic)
A policy design for participating policies which uses the dividends to purchase additional insurance.
The applicant needs a greater amount than they currently can afford so it allows the applicant to purchase a reduced amount of whole life with a term rid
Equity Indexed Whole Life
Most of the premium (usually 80-90%) is invested in traditional fixed income securities.
The remainder of the premium is invested in contracts tied to a stipulated stock index.
When there is a spike in the market, a given percentage of the gain is credite