Chapter 2 Recap

Question 1

What is Term Life?

Answer 1

Pure protection for a specific term, no cash value.

Question 2

What are the types of Term Life?

Answer 2

1. Level Premium – Fixed premium & death benefit.
2. Annually Renewable – Renews yearly without proof, premiums rise with age.
3. Decreasing Term – Coverage decreases over time, best for declining needs.

Question 3

What are the features of Term Life?

Answer 3

Renewable & Convertible without proof of insurability.

Question 4

What is Whole Life?

Answer 4

Permanent protection with guaranteed benefits until death/age 100.

Question 5

What are the types of Whole Life?

Answer 5

1. Ordinary – Level premiums for life.
2. Limited Pay – Premiums paid for a set time, coverage to 100.
3. Single Premium – One lump-sum payment, coverage to 100.

Question 6

What is Flexible Premium?

Answer 6

Universal Life – Flexible premiums with two options: Option A (Level death benefit) and Option B (Increasing death benefit). Partial withdrawals allowed.

Question 7

What is Variable Life?

Answer 7

Fixed premium, fluctuating cash value & death benefit, assets in separate accounts.

Agents need both insurance & securities licenses.

Question 8

What is Joint Life?

Answer 8

Pays out at first death.

Question 9

What is Survivorship Life?

Answer 9

Pays out at last death.

Question 10

What are the phases of Annuities?

Answer 10

1. Accumulation – Pay-in phase.
2. Annuitization – Pay-out phase.

Question 11

Who are the parties involved in Annuities?

Answer 11

1. Annuitant – Insured, must be a person.
2. Beneficiary – Receives funds if annuitant dies before payout.
3. Owner – Holds rights, can be a corporation or trust.

Question 12

What are the types of Annuities?

Answer 12

1. Fixed – Guaranteed payments.
2. Variable – Fluctuates, invested in stocks/bonds.
3. Indexed – Tied to an index, moderate risk.

Question 13

What are the premium types for Annuities?

Answer 13

1. Single – One-time payment, used for immediate or deferred annuities.
2. Periodic (Flexible) – Multiple payments, for deferred annuities only.

Question 14

What are the income payment types for Annuities?

Answer 14

1. Immediate – Starts within 12 months.
2. Deferred – Starts after 1+ years.

Question 15

What are the payout options for Annuities?

Answer 15

1. Lump Sum – Full amount at once.
2. Life Only – Highest payout, ends at death.
3. Refund Life – Guarantees payout to beneficiary if annuitant dies early.
4. Joint Life – Stops at first death.
5. Joint & Survivor – Continues after first death.
6. Annuities Certain – Fixed period or amount.