Chapter 11 Vocab (Notes) Flashcards Preview

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Flashcards in Chapter 11 Vocab (Notes) Deck (35):
1

Premature Death

defined as the death of a family head with outstanding unfulfilled financial obligation

2

Human Life Value

the present value of the family's share of the deceased breadwinner's future earnings

3

Readjustment Period

one to two year period immediately following the breadwinner's death during which time the family should receive approximately the same amount of income it received while the breadwinner was alive

4

Dependency Period

period of time following the readjustment period during which the surviving spouse's children are under 18 and therefore, dependent on the parent

5

Blackout Period

The period during which Social Security benefits are not paid to a surviving spouse - between the time the youngest child reaches age 16 and the surviving spouse's 60th birthday

6

Term Insurance

provides temporary protection

7

Cash Value Life Insurance

has a savings component and builds cash values

8

Convertible

the policy can be exchanged for a cash value policy without evidence of insurability

9

Attained Age Method

premium charged for the new policy is based on the insured's attained age at the time of conversion

10

Original Age Method

premium for new policy is based on the insured's original age when the term insurance was first purchased

11

Yearly Renewable Term Insurance

Issued for one year

12

Term to Age 65 Policy

provides protection to age 65 at which time the policy expires

13

Decreasing Term Life Insurance policy

the face value declines each year

14

Re Entry Term Life Insurance policy

renewal premiums based on select mortality rates if the insured can periodically demonstrate acceptable evidence of insurability

15

Return of Premiums Term Insurance

a product that returns the premiums at the end of the term period provided the insurance is still in force

16

Whole Life Insurance

Cash value policy that provides lifetime protection

17

Ordinary Life INsurance

level premium policy that provides lifetime protection

18

Legal Reserve

liability that must be offset by sufficient financial assets

19

Net Amoutn of Risk

difference between the legal reserve and the face amount of coverage

20

Limited Payment Life Insurance Policy

insured has a lifetime protection, level premiums, but they are only paid for a certain period

21

Cash Surrender Values

a policy holder overpays for protection in the beginning resulting in legal reserves and the accumulation of cash values, the policyholder has the right to borrow the cahs value or exercise cash surrender options

22

Single Premium Whole Life Policy

provides lifetime protection with a single premium

23

Endowment insurance

pays the face amount of insurance if the insured dies, within a specified period. If insured is alive at the end of the period, face amount is paid to the policyholder

24

Variable Life Insurance

fixed premiums, death benefit and cash values vary according to investment experience of a separate account maintained by the insurer

25

Universal Life Insurance

Flexible premium policy that provides lifetime protection

26

Indexed Universal Life Insurance

variation of universal life insurance with key characteristics

27

Variable Universal Life Insurance

important variation of whole life insurance that is mostly sold as investments or tax shelters, the policyholder decides how premiums are invested, the policy does not guarantee a minimum interest rate or minimum cash value, and has relativley high expense charges

28

Current Assumption Whole Life Insurance

nonparticipating whole life policy in which cash values are based on the insurer's current mortality, investment, and expense experience

29

Redetermination Provision

allows the insurer to recalculate the premium after the initial guaranteed period expires

30

Modified Life

whole policy where premiums are lower for 1st 3-5 years and higher thereafter

31

Preferred Risk

Policies sold at lower rates to individuals whose mortality experience is expected to be lower than average

32

Second to Die Life INsurance

insures two or more lives and pays the death benefit upon the death of the second or last insured

33

Savings Bank Life Insurance (SBLI)

Life insurance sold by savings banks

34

Industrial Life Insurance

Policies sold in small amounts and an agent of the company collected premiums at insured's home

35

Group Life Insurance

provides life insurance on a group in a single master contract