LifeInsurancePolicies Flashcards
(22 cards)
Industrial Life Insurance
issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.
Ordinary Life Insurance
is life insurance of commercial companies not issued on the weekly premium basis. It is made up of several types of individual life insurance, such as temporary (term), permanent (whole).
Term Life Insurance
give the greatest amount of coverage for a limited period of time.
Term insurance is an inexpensive type of insurance…., and due to having a termination date and not having any cash value……it only pays a death benefit if the insured dies during the policy term.
Level Term
is also called Premium Level Term, Premiums tend to be higher than annual renewable term because they are level throughout the policy period. However, the premiums will increase at each renewal. Life insurance written to cover a need for a specified period of time at the lowest premium is called Level Term Insurance.
Decreasing Term
is term life insurance that provides an annually decreasing face amount over time with level premiums. These policies are usually used for mortgage protection. A decreasing term policy is a type of life policy which has a death benefit that adjusts periodically (according to a schedule) and is written for a specific period of time.
Credit Policies
are typically 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.
Increasing Term
is term life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount.
Convertible Term
is a provision that allows policyowners to convert their term insurance into permanent policies without showing proof of insurability.
Renewable Term
is term insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.
Annual Renewable Term
is term coverage that provides a level face amount that renews annually. This type of coverage is guaranteed renewable annually without proof of insurability.
Term Rider
is a type of life insurance product which covers children under their parent’s policy. Family plan policies usually cover the family head with permanent insurance, and the coverage on the spouse and children is term insurance in the form of a rider. A Rider Term is always Level Term.
Whole Life Insurance
provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. It matures at age 100 and normally has a Level Premium…….The only difference in “types” of whole life is how the policy is paid.
Different types of whole Life
Straight Life Insurance
Limited Pay
Modified
Modified Endowment Contract
Whole Life - Straight Life Insurance
premiums are payable throughout the insured’s lifetime, and coverage continues until the insured’s death.
Whole Life - Limited Pay
…., if you were to purchase a 20-pay policy, premiums would need to be paid for 20 consecutive years. After that you would not be required to make any additional premium payments, and your coverage would be guaranteed until death or age 100.
Whole Life - Modified
is a policy where the premium stays fixed for the first 5 years, and then increases in year 6 and stays level for the remainder of the policy.
Whole Life - Modified Endowment contract (MEC)
is best described as a policy that exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract. A MEC does not meet the 7-pay test and is considered over-funded, according to the IRS. For that reason, the policy will lose favorable tax treatment.
Joint Life Policy
covers the lives of 2 individuals and save on premium cost by averaging the ages of the two insureds. …The policy is shared between two people, and when one person dies, the other receives the entire account.
Family Maintenance Policy
pays a monthly income from the date of death of the insured to the end of the preselected period.
Pays a lump sum at the end of the period.
Family Income Policies
pay an income beginning at the insured’s death and continues for a period specified from the date of policy issue. For example, G purchased a Family Income policy at age 40, with a 20-year rider period. If G were to die at age 50, G’s family would receive an income for 10 years.
Adjustable Life Policy
owner is usually looking for a policy offering flexible premiums. As financial needs and objectives change, the policyowner can make adjustments to the premium an/or face amount of an Adjustable Life insurance policy….
….There are typically are no dividends involved with adjustable life policies. Increasing the face amount may require a policyowner to proved proof of insurability.
Universal Life Insurance Policy
incorporates flexible premiums and an adjustable death benefit
