Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Life & Health > Chapter 4: Life Insurance, Types of Policies > Flashcards

Chapter 4: Life Insurance, Types of Policies Flashcards

1
Q

Industrial Life:
Premiums paid?
How often and collected by whom?
Designed for?

A

Premiums Paid: $1000/$2000
Paid weekly and collected by Debit Agents
Designed for burial coverage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Group Life

A

Insurance written for memebers of a group.
One master contract.
Usually no evidence of insurability required

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Ordinary Life (2)

A

Term life and whole life insurance policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Term LIfe

A

Pure death protection- only pays death benefit if the insured dies during the policy term
Renewable and convertible
Termination date
Convertible to whole

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Level Term

A

AKA Premium Level Term
Level face amount and level premiums.
Premiums are higher than annual renewable term, however prices can rise at each renewal.
Low premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Decreasing Term

A

Annual decreasing face amount over time with level premiums.
Used for mortgage protections.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Credit Policies

A

Purchased using a decreasing term life insurance policy, with the term matched to the length of the loan period and the decreasing insurance amount matched to the declining loan balance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Renewable Term

A

Term insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Annual Renewable Term

A

Level face amount
Renews annually
Doesnt need proof of insurability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Term-Rider

A

Covers children under their parent’s policy.
Lvel term.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Whole life

A

Insurance that provides death benefits for the entire life.
Living benefits in form of cash value/policy loans
Matures at age 100
Level premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Types of Whole Life Insurance (5)

A
  1. Straight Whole Life
  2. Limited Pay Whole Life
  3. Single-premium Whole Life
  4. Modified Whole Life
  5. Graded Whole Life
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Straight Life

A

Basic who life insurance
Level face amount
Fixed premiums over lifetime
Death or age 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Limited Pay Whole Life

A

Premiums paid for limited time
Cash value increase faster
Fixed premiums are higher

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Single Premium Whole Life

A

One lump sum coverage for whole life
Nonforfeiture value is created
Immediate cash value is created
Premium > policy’s reserve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Modified Whole Life

A

Low premiums upfront, high premiums later.
Only one premium increase.

17
Q

Graded Whole Life

A

Premium increases yearly, then remains level.

18
Q

Family Plan Policy

A

Family Head (whole life) + family term riders

19
Q

Family Income Policies

A

Whole life + decreasing term

20
Q

Family Maintenance Policy

A

Whole Life + Level Term

21
Q

Joint Life Policy

A

A policy that covers 2 or more people.
Permanent Insurance

22
Q

Survivorship Life Policy

A

AKA Second to Die Policy
Covers 2 lives but benefit is paid upon the death of the last surviving insured.

23
Q

Interest Sensitive Whole Life

A

AKA Current Assumption Whole Life Insurance
Whole Life
Cash value can increase beyond the state guaranteed if economic conditions warrant

24
Q

Adjustable Life Policies

A

Combined term and whole life into a single plan
Policy owner determines how much face amount is needed and how much premium to pay
May vary coverage without needing proof of insurability
Level premium
Cash Value

25
Q

Universal Life

A

Flexible Premiums
Gains go towards cash value
Policyowner determines amount and frequency of premium payments.
No minimum death benefit.
Cash value withdrawals.
Cash value accumulation minimum interest guaranteed.

26
Q

Equity Index Universal Life Insurance

A

Ties permanent life to stock market indexes.
Minimum guaranteed fixed interest + indexed account option.

27
Q

Modified Endowment Contracts (MEC)

A

Overfunded according to IRS
7 pay test: if withdrawn prior to 59.5 there is a 10% penalty.
Taxation occurs when cash is distributed.
Funds withdrawn are subject to LIFO- taxes as ordinary income
Penalty taxes apply to premature policy loans

28
Q

Variable Insurance Products

A

Transfers the investment risk from the insurer to the policy owner

29
Q

Variable Whole Life

A

Policy values invested in the insurer’s separate accounts which house common stock, bond, money market and other securities investment options.
Riskier, higher yielding (potenttially)
Fixed premiums
Guaranteed minimum death benefits
Cash values

30
Q

Variable Universal Life

A

Builds cash value
Invested in several accounts and into the stock market or bond market
Flexible premium payments
Adjustable death benefits (but if it increases, then the insured must requalify)

31
Q

Re-entry Feature

A

AKA. Revertible term life insurance
Insured has the option of taking the standard renewal rate without proving insurability. However, to ensure the lowest rate, they may need to requalify.

Life & Health (19 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions