Insurance Concepts Chapter 3
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Questions and Answers

What is Industrial Life Insurance designed for?

  • Burial coverage (correct)
  • Retirement coverage
  • Life savings
  • Health coverage

    • What is the premium payment frequency for Industrial Life Insurance?

    Weekly

    Which of the following types of insurance is NOT based on a weekly premium?

  • Ordinary Life Insurance (correct)
  • Term Life Insurance
  • Industrial Life Insurance
  • Group Life Insurance

    • What is Group Life Insurance?

    <p>Insurance written for members of a group under one master contract.</p> Signup and view all the answers

    Which type of life insurance does NOT accumulate cash value?

    <p>Term Life Insurance</p> Signup and view all the answers

    What is a Renewable Term insurance?

    <p>Term insurance that guarantees the right to continue coverage without proving insurability.</p> Signup and view all the answers

    What does Cash Value refer to in a whole life policy?

    <p>The equity amount or savings accumulation</p> Signup and view all the answers

    What is an Endowment Policy?

    <p>A contract providing for payment at a fixed period or at the death of the insured.</p> Signup and view all the answers

    What is the primary purpose of Juvenile Insurance?

    <p>Written on the lives of children within specified age limits.</p> Signup and view all the answers

    What feature is characterized by Universal Life insurance?

    <p>Flexible premiums and adjustable death benefits</p> Signup and view all the answers

    What does Adjustable Life insurance provide?

    <p>Flexible premiums and adjustable death benefits.</p> Signup and view all the answers

    Variable Insurance includes regulated securities.

    <p>True</p> Signup and view all the answers

    Name the three terms of policies coverages.

    <p>Level Term policy, Increasing Term policy, Decreasing Term policy.</p> Signup and view all the answers

    What characterizes a Level Term Policy?

    <p>It provides temporary protection that does not change throughout the policy's life.</p> Signup and view all the answers

    What is a Decreasing Term Policy used for?

    <p>Protection needs that decrease over time, often used for mortgages.</p> Signup and view all the answers

    What does the Increasing Term Policy do?

    <p>Increases the amount of coverage every year of the policy term.</p> Signup and view all the answers

    What are special features of term policies?

    <p>Renewable, Convertible, or Renewable and Convertible options.</p> Signup and view all the answers

    Study Notes

    Industrial Life Insurance

    • Issues small face amounts, typically $1,000 or $2,000.
    • Premiums are paid weekly and collected by debit agents.
    • Designed primarily for burial coverage.

    Ordinary Life Insurance

    • Life insurance not issued on a weekly premium basis.
    • Includes various types such as temporary (term) and permanent (whole).

    Group Life Insurance

    • Insurance coverage provided to members of a group like employers or unions.
    • Coverage provided under one master contract, with group underwriting.
    • No evidence of insurability usually required for members.

    Term Life Insurance

    • Offers maximum coverage for a limited period, known as pure life insurance.
    • Benefits paid to beneficiaries if insured dies during the policy term.
    • No cash value or living benefits.

    Renewable Term

    • Guarantees the right to continue coverage after the initial policy period.
    • No proof of insurability needed for renewal.

    Cash Value

    • Represents the savings accumulation in a whole life policy.

    Endowment Policy

    • Pays the face amount at the end of a fixed period or at a specified age, or upon the insured's death before the end of the period.

    Juvenile Insurance

    • Insurance written on the lives of children within specified age limits.

    Universal Life

    • Features flexible premiums and adjustable death benefits.
    • Investment gains typically contribute to cash value.
    • Ideal for customers desiring control and options with their policy.

    Adjustable Life

    • Offers flexible premiums adjusting to changing financial needs.
    • Combines whole life and term life into a single plan.
    • No dividends involved; increasing face amounts may require proof of insurability.

    Variable Insurance

    • Requires FINRA and NASD registration for producers to sell.
    • Includes interest-sensitive policies with fluctuating cash value and death benefits based on investment performance.
    • Commonly linked to mutual funds, stocks, and bonds.

    Types of Term Policies

    • Three main types: Level Term, Increasing Term, and Decreasing Term.

    Level Term Policy

    • The most common type of temporary protection.
    • Premiums and death benefits remain constant throughout the policy's life.

    Decreasing Term Policy

    • Features a level premium with death benefit decreasing annually.
    • Often used to cover mortgage debts as protection decreases with loan balance.

    Increasing Term Policy

    • Has a level premium with death benefits increasing annually by a specified percentage.

    Special Features of Term Policies

    • Options include Renewable, Convertible, or combinations of both.

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    Quiz Team

    Description

    Test your knowledge on key insurance concepts from Chapter 3. This quiz covers different types of life insurance including industrial and ordinary life insurance. Prepare to understand their definitions and distinctions.

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