Types of Individual Life Insurance

Unlike term life that covers a set time, whole life insurance offers coverage for the entire insured's lifetime, guaranteeing a death benefit payout upon their passing.

Whole life insurance premiums remain fixed, not increasing with age. This makes budgeting easier and more stable over time.

Policyholders can borrow against their accumulated cash value within the policy. This allows them to access funds with usually favorable interest rates.

Whole life policies have a cash value component that grows over time, potentially exceeding the original premiums. This growth is tax-deferred until withdrawn.

Participating whole life policies might pay dividends based on the insurer's profits. Policyholders can choose how to use these dividends, such as cash, premium payments, or reinvestment.

The policy guarantees a specific death benefit to the beneficiaries when the insured passes away. This provides financial protection and peace of mind.

Whole life insurance requires a long-term commitment, as it's designed for lifetime coverage. It's suitable for those seeking lifelong coverage and cash value growth.

While whole life insurance offers stability and cash value, it's important to consider its higher premiums compared to term life insurance. Evaluate your financial needs and goals before choosing a policy.

The minimum difference between the total death benefit and the cash value of a universal life insurance policy. This difference is required to ensure the policy remains classified as life insurance for tax purposes and meets IRS guidelines.

A type of whole life insurance policy where the premium and cash value can fluctuate based on current interest rates, offering potential for higher returns but also some risk.

The principle behind annuities, where an individual pays a lump sum or installments to an insurance company in exchange for a series of future payments.

A type of life insurance that offers a guaranteed minimum interest rate for cash value accumulation and sometimes a guaranteed minimum death benefit, providing a safety net for policyholders.

The ability for policyholders to adjust their premium payments in interest-sensitive whole life insurance based on the insurance company's current estimations of mortality, investment returns, and expenses.

The growth of cash value in interest-sensitive whole life insurance is influenced by current market interest rates, potentially exceeding the returns of traditional whole life insurance.

A financial product that converts a lump sum of money into a series of payments, often used for retirement income and providing a predictable income stream for a specific period or for life.

Interest-sensitive whole life insurance may offer dividends to policyholders, providing an additional source of cash value growth or premium reduction.

A one-time lump sum payment made to purchase an annuity, potentially allowing for immediate income depending on the annuity type.

Annuity payments are made over time, with the amount and frequency of payment potentially varying.

Benefits are fixed, guaranteeing a predetermined payout that doesn't change. Offers predictability and stability for income.

Benefits fluctuate based on the performance of investments chosen by the annuitant, with potential for higher returns but also greater risk.

Returns are linked to a specific equity market index, offering market growth but with potential for losses. Often includes a minimum return guarantee.

Annuity payments begin immediately following the premium payment or within a year of purchase.

Benefits begin at a future date specified in the contract, allowing for value to accumulate before payouts start.

Payments continue for the lifetime of two individuals, typically a couple, with the amount potentially reducing after one person's passing.

The requirement that the policyholder has a financial connection to the insured, preventing insurance from being used for speculative purposes.

Contracts where the outcome depends on uncertain events, like insurance policies. Premiums paid and potential benefits might not be proportionate.

Insurance contracts requiring specific events or conditions to be fulfilled before the insurer pays claims. Examples include paying premiums or adhering to policy exclusions.

When someone makes inaccurate statements on an application, potentially jeopardizing the policy's validity.

The act of intentionally hiding important information from the insurance company.

This cost comparison method uses the time value of money, adjusting for interest rates. It gives a clearer picture of the actual cost over time.

One party, the insurer, is obligated to fulfill the contract terms, while the insured's obligations are conditional.

Simple method that calculates the cost by subtracting expected cash value and dividends from total premiums paid over a period. Doesn't factor in time value of money or interest rates.

This is the initial step involving the applicant filling out a form with details like health, lifestyle, and other relevant information. Helps insurers assess risk and determine premiums.

The insurer drafts the policy, and the insured generally has little power to negotiate the terms.

Insurance is intended to compensate for losses, not give the insured a profit.

A receipt issued when an applicant pays a premium at the time of applying. It acknowledges the payment and can provide coverage starting from that day.

The act of assuming another's identity to obtain insurance fraudulently.

This concept implies that courts generally favour the policyholder in case of ambiguities in the contract because the insurer drafted it.

The North Carolina Department of Insurance regulates various aspects of life insurance, including licensing of agents and brokers, unfair trade practices, and consumer protection measures.

The Insurance Information and Privacy Protection Act ensures that personal information used in insurance decisions is protected and handled responsibly. It sets guidelines for data collection, use, and disclosure.

The Commissioner of Insurance is the top official responsible for overseeing the insurance industry in North Carolina, ensuring compliance with regulations and protecting consumers.

Continuing education requirements help insurance professionals stay updated on industry changes, laws, and best practices, ensuring that they provide informed and competent advice.

The Life and Health Insurance Guaranty Association provides a safety net for policyholders if an insurance company becomes insolvent. It helps ensure that claims are paid up to certain limits.

The Insurance Information & Privacy Protection Act (G.S. 58-39-5 through 58-39-120) sets guidelines for how insurers can collect, use, and disclose personal information about individuals.

The term "viaticals" refers to a type of life insurance investment where an individual buys a life insurance policy from a terminally ill person at a discounted price. This allows the policyholder to receive a lump sum payment, and the investor gets the potential future death benefit.

North Carolina's insurance regulations encompass a range of topics, including licensing, fair practices, and consumer protection. This regulatory framework aims to maintain a stable and reliable insurance market while safeguarding the interests of consumers.