Types of Life Policies Flashcards

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Questions and Answers

What type of insurance provides temporary protection for a specific period of time?

Universal life insurance

Whole life insurance

Term insurance (correct)

Adjustable life

What does pure life insurance provide?

Temporary protection for a specific period of time.

What does the renewable provision allow the policyowner to do?

Renew the coverage at the expiration date without evidence of insurability.

What right does the convertible provision provide the policyowner?

Convert the policy to a permanent insurance policy without evidence of insurability. Signup and view all the answers

Which of the following is the most common type of temporary protection purchased?

Term insurance Signup and view all the answers

How does annually renewable term insurance operate?

The premium increases annually according to the attained age. Signup and view all the answers

What characterizes decreasing term policies?

Level premium and a death benefit that decreases each year. Signup and view all the answers

What is the feature of increasing term insurance?

Level premiums and a death benefit that increases each year. Signup and view all the answers

What benefit does return of premium insurance provide?

Pays an additional death benefit equal to the amount of premiums paid. Signup and view all the answers

What does permanent life insurance refer to?

Various forms of life insurance policies that build cash value. Signup and view all the answers

What is a key feature of whole life insurance?

Provides lifetime protection and includes a cash value element. Signup and view all the answers

Describe straight life insurance.

A whole life policy with premiums paid until death or age 100. Signup and view all the answers

What is the purpose of limited-pay whole life insurance?

To ensure premiums are completely paid-up before age 100. Signup and view all the answers

What defines Single Premium Whole Life insurance?

Provides a level death benefit for a one-time lump-sum payment. Signup and view all the answers

What flexibility does an adjustable life policy provide?

Can take the form of either term insurance or permanent insurance. Signup and view all the answers

What does universal life insurance imply for policyowner's premiums?

Flexibility to increase or decrease the premium amount. Signup and view all the answers

What is the minimum premium needed for?

To keep the policy in force for the current year. Signup and view all the answers

What is a target premium?

A recommended amount to cover the cost of insurance protection. Signup and view all the answers

Study Notes

Types of Life Policies

Term Insurance: Provides temporary protection for a specified period; coverage ends after duration.
Pure Life Insurance: Similar to term insurance, offers temporary protection without cash value accumulation.
Renewable Provision: Allows policyholders to renew coverage at expiration without needing to prove insurability.
Convertible Provision: Grants the policyholder the right to convert to a permanent insurance policy without evidence of insurability.
Level Term Insurance: Most common form of temporary protection, features a fixed death benefit throughout the policy duration.
Annually Renewable Term: Death benefit remains level; premiums increase annually based on the insured’s age.
Decreasing Term Insurance: Offers a level premium with an annual decrease in death benefit over the policy term.
Increasing Term Insurance: Provides level premiums but an increasing death benefit each year during the policy term.
Return of Premium: A form of increasing term insurance that refunds total premiums paid if the insured does not pass away.
Permanent Life Insurance: Covers various policies that build cash value, remaining effective for the insured's lifetime or until age 100.
Whole Life Insurance: Offers lifetime protection with a savings component (cash value) that grows over time.
Straight Life Insurance: Also known as Continuous Premium Whole Life; premiums are paid until death or age 100, offering the lowest annual cost.
Limited-Pay Whole Life: Premiums are designed to be fully paid up before age 100, offering lifelong coverage.
Single Premium Whole Life: Requires a one-time payment to provide coverage until age 100, offering a fixed death benefit.
Adjustable Life Insurance: Can be structured as either term or permanent insurance, depending on policyholder need.
Universal Life Insurance: Offers flexibility, allowing policyholders to adjust premium payments as needed over time.
Flexible Premium Adjustable Life: Similar to universal life, it enables adjustments in premium amounts.
Minimum Premium: The lowest amount required to keep the policy active for the current year.
Target Premium: A suggested payment amount to cover insurance costs and maintain the policy over its lifetime.

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Description

Test your knowledge of various life insurance policies with these flashcards. Each card provides definitions of essential terms related to life insurance, such as term insurance and renewable options. Perfect for students or anyone wanting to learn about insurance concepts.