Premiums, Proceeds and Beneficiaries Terms Flashcards
(20 cards)
Which rider allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness and is certified by a physician as expected to die within 1-2 years.
Accelerated Benefit (Option) Rider:
The person or entity designated in a life insurance policy to receive the death proceeds.
Beneficiary
The equity or savings element of whole life insurance policies.
Cash Value
A beneficiary group designation (for example, all of my children), opposed to specifying one or more beneficiaries by name.
Class Designation
A provision of the Uniform Simultaneous Death Act, which ensures a policyowner if both the insured and the primary beneficiary die within a short period of time, the death benefits will be paid to the contingent beneficiary. It also states that the primary beneficiary must outlive the insured by a specified period of time in order to receive the proceeds.
Common Disaster Provision
The beneficiary second in line to receive death benefit proceeds if the primary beneficiary dies before the insured.
Contingent (Secondary) Beneficiary
The amount of premium paid by the policyowner for policy coverage or insurance protection received up to this point.
Earned Premium
Also known as the loading charge, is a measure of what it costs an insurance company to operate.
Expense Factor
Provision in life insurance which means that the cash value will increase faster than the guaranteed rate if the insurer earns a greater return than the guaranteed rate.
Excess Interest
Installment option that pays a fixed death benefit in specified installment amounts until the principal and interest are exhausted.
Fixed Amount Installment Option
The concept of averaging what would be the total single premium for a policy over periodic payments. More periodic payments = higher total premium.
Fixed/Level Premium
A settlement option that pays the death benefit proceeds in equal installments over a set period of years. The dollar amount of each installment depends upon the total number of installments.
Fixed Period Or Period Certain Option
Premium funding option characterized by a lower premium in the early years of the contract, with premiums increasing annually for an introductory period. After the introductory period, the premium jumps to an amount higher than what the initial level premium would have been. It then remains fixed or constant for the life of the policy.
Graded Premium
The net premium for insurance plus commissions, operating and miscellaneous expenses, and dividends
Gross (Annual) Premium
The calculation for determining the amount of interest an insurance company can expect to earn from investing insurance premiums.
Interest Factor
Type of death settlement option where the insurance company holds the death benefit for a period of time and pays only the interest earned to the named beneficiary. A minimum rate of interest is guaranteed, and the interest must be paid at least annually.
Interest Only Option
Beneficiary which may not be changed by the policyowner without the written consent of the beneficiary.
Irrevocable Beneficiary
A settlement option that guarantees that benefits will be paid on a life-long basis to two or more people. This option may include a period certain, and the amount payable is based on the ages of the beneficiaries.
Joint And Survivor Option
A type of death benefit settlement option which provides the beneficiary with an income that they cannot outlive. Installment payments are guaranteed for as long as the recipient lives. The amount of each installment is based on the recipient’s life expectancy and the amount of principal.
Life Income Option
An agreement in which a policyholder sells or transfers ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of the policy.
Life Settlement
