Chapter 11 Vocab (Text) Flashcards Preview

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Flashcards in Chapter 11 Vocab (Text) Deck (29):
1

Premature Death

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

2

Traditional Families

families in which only one parent is in the labor force, and the other parent stays at home to take care of dependent children

3

Blended Family

a family is one in which a divorced spouse with children remarries, and the new spouse also has children

4

Human Life Value

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

5

Readjustment Period

one or two year period following the breadwinner's death

6

Dependency Period

follows the readjustment period; the period until the youngest child reaches age 18

7

Blackout Period

the period from the time that Social Security survivor benefits terminate to the time the benefits are resumed

8

Term Insurance

provides temporary insurance protection

9

Reentry Term

term insurance policy in which renewal premiums are based on select (lower) mortality rates if the insured can periodically demonstrate acceptable evidence of insurability

10

Whole Life Insurance

cash value policy that provides lifetime protection

11

Ordinary Life Insurance

a level-premium policy that provides cash values and lifetime protection to age 121

12

Legal Reserve

The excess premiums paid during the early years are accumulated at compound interest and are then used to supplement the inadequate premiums paid during the later years of the policy

13

Net Amount of Risk

the difference between the legal reserve and face amount of insurance

14

Cash-Surrender Values

the amount paid to a policyholder who surrenders the policy

15

Limited Payment Policy

another type of traditional whole life insurance where the insurance is permanent and the insured has lifetime protection. The premiums are level, but they are only paid for a certain period

16

Single-Premium Whole Life Insurance

provides lifetime protection with a single premium

17

Endowment Insurance

pays the face amount of the insurance if the insured dies within a specified period; if the insured survives to the end of the endowment period, the face amount is paid to the policyholder at that time

18

Variable Life Insurance

defined as a fixed-premium policy in which the death benefit and cash values vary according to the investment experience of a separate account maintained by the insurer

19

Universal Life INsurance

flexible premium policy that provides protection under a contract that unbundles the protection and saving components

20

Indexed Universal Life Insurance

variation of universal life insurance with certain key characteristics; there is no minimum interest rate guarantee, additional interest may be credited to the policy based on investment gains of a specific stock market interest, there is a formula for determining the amount of enhanced interest credited to the policy, and there is often considerable consumer misunderstanding and unrealistic performance expectations under this type of policy

21

Variable Whole Life Insurance

important variation of whole life insurance; similar to a universal life policy with two major exceptions: the p/h determines how the premiums are invested and the policy does not guarantee a minimum interest rate or minimum cash value

22

Current Assumption Whole Life Insurance

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

23

Modified Life Policy

whole life policy in which premiums are lower for the first three to five years and higher thereafter

24

Preferred Risk

individuals whose mortality experience is expected to be lower than average

25

Second to Die Life INsurance

form of life insurance that insures two or more lives and pays the death benefit upon the death of the second or last insured

26

Savings Bank Life Insurance (SBLI)

type of insurance that was sold originally by savings banks in Massachusetts, New York, and Connecticut

27

Industrial Life Insurance

class of life insurance that was issued in small amounts; premiums were payable weekly or monthly; and an agent of the company collected the premiums at the insured's home

28

Home Service Life Insurance

Today's industrial life insurance

29

Group Life INsurance

type of insurance that provides life insurance on a group of people in a single master contract