Term Life Insurance (Pure Life Insurance)
Temporary Insurance"... Insurance that provides protection for a specific period of time.
Pure Death Protection
(Term Life Insurance)
If the insured dies during this term, the policy pays the death benefit to the beneficiary (Term Life Insurance)
3 Types of Term Life Insurance
1. Level 2. Increasing 3. Decreasing
(Term Life Insurance)
Level Term Insurance
(Term Life Insurance)
Most common type of temporary protection purchased.
(Term Life Insurance)
Level Premium
(Term Life Insurance)
A policy premium that remains the same over the period of time premiums are paid. (Term Life Insurance)
Annually Renewable Term (ART)
(Term Life Insurance)
The Purest Form" of term insurance. The death benefit remains level, and the policy maybe guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as the probability of death in
Decreasing Term
(Term Life Insurance)
A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy. It is commonly purchased to insure the payment of a mortgage or other debts if the insured dies prematurely (Term Life Ins
Increasing Term
(Term Life Insurance)
Level premiums and a death benefit that increase each year over the duration of the policy term. It is often used by insurance companies to fund certain riders that provide a "refund of premiums" or "gradual increase" in total coverage such as the cost fo
3 Special Features of Term Life Insurance
(Term Life Insurance)
Most Term Insurance policies are 1. Renewable 2. Convertible 3. Renewable and Convertible (R&C)
(Term Life Insurance)
Renewable Term
(Term Life Insurance)
Insurance which can, at the election of the policyowner, be renewed at the end of a term without evidence of insurability. The premium for the new term policy will be based on the insured's current age. (Term Life Insurance)
Convertible Term
(Term Life Insurance)
A policy that may be exchange for another type of policy by contractual provision, at the option of the policyowner, and without evidence of insurability. Example: Term life changed to a form of permanent life. (Term Life Insurance)
Permanent Life Insurance
(Whole Life Insurance)
A general term used to refer to various forms of whole life insurance policies that remain in effect to the age of 100 so long as the premium is paid. (Whole Life Insurance)
Whole Life Insurance
(Whole Life Insurance)
Insurance that is kept in force for a person's entire life and pays a benefit upon the person's death , whenever that may be. Premiums are higher than Term Insurance. (Whole Life Insurance)
4 Key Characteristics of Whole Life Insurance
1.Level Premium 2. Death Benefit 3. Cash Value 4. Living Benefits
(4 Key Characteristics of Whole Life Insurance)
Level Premium
(4 Key Characteristics of Whole Life Insurance)
A policy premium -based on Age- that remains the same over the period of time premiums are paid.
(4 Key Characteristics of Whole Life Insurance)
Death Benefit
(4 Key Characteristics of Whole Life Insurance)
The death benefit is guaranteed and remains level for life
(4 Key Characteristics of Whole Life Insurance)
Cash Value " Nonforfeiture Value"
(4 Key Characteristics of Whole Life Insurance)
The amount - created by the accumulation of premium- is scheduled to equal the face amount of the policy when the insured reaches age 100 (policy mature date) and is paid out to the policyowner. (4 Key Characteristics of Whole Life Insurance)
Living Benefits
(4 Key Characteristics of Whole Life Insurance)
The policyowner can borrow against the cash value while the policy is in effect, or can receive a cash value when the policy is surrendered. The cash value does not usually accumulate until the third policy year and it grows tax deferred.
(4 Key Character
3 Basic Forms of Whole Life Insurance
1. Straight Whole Life, 2. Limited Pay Whole Life, 3. Single Premium Whole Life.
(3 Basic Forms of Whole Life Insurance)
Straight (Ordinary) Whole Life (Continuous Premium)
(3 Basic Forms of Whole Life Insurance)
The policy owner pays the level annual premium from the time the policy is issued until the insured death or the age of 100 (Whichever comes first). It is the -most- common and has the LOWEST annual premium. (3 Basic Forms of Whole Life Insurance)
Limited Pay Whole Life (LPWL)
(3 Basic Forms of Whole Life Insurance)
Designed so the premiums for the coverage will be completely paid up well before the age 100. Most common is having the coverage paid in 20 years so that the insured is paid in full by age 65. It has a higher annual premium than Straight Whole Life. (3 Ba
Single Premium Whole Life (SPWL)
(3 Basic Forms of Whole Life Insurance)
Designed to provide a level death benefit to the insured's age 100 for a one time , Lump-Sum Payment. The policy is completely paid-up after one premium and it generates immediate cash. Most companies require a minimal premium for a single premium policy.
Adjustable Life Insurance
Insurance that provides the best of 2 worlds (Term and Permanent coverage). Life insurance that permits changes in the face amount, premium amount, period of protection, and change the duration of the premium payment period. (*Cash value only develops whe
Cash Value
The amount to which a policyowner is entitled if the policy is surrendered before maturity.
Universal Life Insurance/(Flexible Premium Adjustable Life)
A combination of flexible premium and adjustable life insurance. It applies that the policy owner has the flexibility to increase the amount of the premium paid into the policy and to later decrease it again. -**It also is an interest sensitive policy-
Minium Premium
(Universal Life)
The amount needed to keep the policy in force for the current year. Paying this will make the policy perform as an annual renewable term product. (Universal Life)
Target Premium
(Universal Life)
The recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime. (Universal Life)
2 Components of Universal Life
1. Insurance component and 2. Cash account component. * The Insurance component is always an " Annually Renewable Term Insurance". (Universal Life)
2 Options of Universal Life
1. Option A: "Level Death Benefit Option" and Option B: "Increasing Death Benefit Option". (Universal Life)
Option A : "Level Death Benefit Option"
(Universal Life)
The death benefit remains level while the cash value gradually increases, thereby lowering the "Pure Insurance" with the insurer in the later years. (Universal Life)
Option B : "Increasing Death Benefit Option"
(Universal Life)
The death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the
Variable Life Insurance
Is a level, fixed premium, investment-based product that guarantees minimal death benefit. ** The Cash Value of the policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer. (Var
Separate account
(Variable Life Insurance)
This account invests in Stocks, Bonds, and other security investment options. Because the insurance company is not sustaining the investment risk of the contract, the underlying assets of the contract cannot be kept in the insurance company's general acco
Regulation of Variable Products "SEC & FINRA"
(Variable Life Insurance)
Federal regulation stating that Variable contracts must be regulated by SEC (Securities and Exchange Commission). State regulation states agents selling Variable insurance products must be licensed and must be registered with FINRA (Financial Industry Reg
Variable Universal Life Insurance
Combines many features of the (1)Whole Life with the flexible premium of (2)Universal Life and the investment component of (3)Variable Life,.... making it a "securities version" of the universal life insurance.
Joint Life ("First-to-die")
(Combination Plans and Variations)
A single policy that is designed to insure two or more lives. The can be in the form of (1) Term Insurance or (2) Permanent Insurance. ** The Death Benefit is paid after the first death only (Combination Plans and Variations)
Survivorship Life ("Second-to-die")
(Combination Plans and Variations)
A policy that pays on the Last death. Since the joint life expectancy in a sense is extended, resulting in a lower premium than Joint Life Insurance. It is often used to offset the liability of the estate tax upon the death of the last insured. (Combinati
Endowments
(Combination Plans and Variations)
Another type of Whole Life with a slight variation in the maturity date. They provide a permanent, level death protection if the insured should die prematurely, and they accumulate cash values. It matures at an earlier age (before 100). The premium is hig
Annuity
A contract that provides income for a specific period of years, or for life.
Liquidation (Annuity)
Selling assets as a method of raising capitol
(Annuity)
Accumulation Period ("Pay-in-period") (Annuity)
The period of time over which the annuitant makes payments (premiums) into an annuity. It is the period of time during which the payments earn interest on a tax-deferred bases. (Annuity)
Annuitization Period/ Annuity Period
(Annuity)
The time during which the sum that has been accumulated during the Accumulation period is converted into a stream of income payments to the annuitant. (Annuity)
Immediate annuity
(Annuity)
It is purchased with a single, lump-sum payment and provides income payments that start within one year from the date of purchase. (Annuity)
Deferred annuity
(Annuity)
An annuity in which the income payments begin sometime one year after from the date of purchase. (annuity).
Fixed Annuity
(Annuity)
An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase payment(s). Income -annuity- payments that do not vary from one payment to the next. (Annuity)
Variable Annuities
(Annuity)
Serves as a hedge against inflation, and is a variable from the standpoint that the annuitant may receive different rates of return on the funds that are paid into annuity. (Annuity)
Indexed Annuities or (Equity Indexed)
(Annuity)
They are fixed annuities that invest on a regularly aggressive basis to aim for HIGHER return. Like a fixed annuity, it has a guaranteed minimum interest rate. (Annuity)
Lump-sum Settlement
(Annuity)
Settlement method that pays the beneficiary the entire proceeds to the beneficiary. (Annuity)
Qualified Retirement Plans
(Annuity)
Retirement plan that meets the IRS guidelines for receiving favorable tax treatment.(Annuity)
Education Funds
(Annuity)
In addition to providing income for retirement and estate liquidation, annuities can be used to accumulate funds for college education.
(Annuity)