Types of Life Insurance

cso683's version from 2016-02-02 13:27

Section Life

Question Answer
Types of Life InsuranceTWUGSCV - Term, Whole, Universal, Group, Specialized, Credit, Variable
Definition of Term LifeTemporary protection, pure life insurance
Type of Term InsuranceLIDR - Level Term (sub-type is Annual Renewable Term), Increasing Term (Death benefit goes up), Decreasing Term (Death benefit goes down) (good for mortgages), Return of Premium (increasing term policy that returns a portion of the premium at end of term)
Definition of Whole LifePermanent insurance (to age 100), accumulates cash value
Characteristics of Whole LifeDLCL - Death benefit, Level premium, Cash Value, Living Benefits (cash value loans)
Types of Whole LifeCLASI - Continuous Premium (Straight Life) (lowest premium), Limited Payment (paid up at retirement), Adjustable Life (can change premium, face amount, type of life policy as needed), Single premium (paid up from start), Indexed (cash value based on stock index)
Universal Life TermsMinimum Premium (needed to keep policy in force), Target Premium (can cover cost of insurance protection and keep policy in force), Insurer guarantees contract interest rate, Policy owner may get current interest rate.
Components of Universal LifeInsurance and Cash component (Insurance part covered by annually renewable term)
Waiver of cost of insurance riderIn the event of disability, this rider waives cost of insurance, does not waive cost of cash value premiums
Death benefit options for Universal LifeA - Level death benefit - constant then rises to stay ahead of cash value by the IRS corridor amount, B - Increasing Death Benefit (rises over life of policy)
Cash Value of a Universal Life PolicyThe insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and back the cash value with a lower guaranteed (contract) rate of interest
Definition of Variable Life InsuranceLevel, fixed premium, investment-based product. Minimum death benefit, but variable cash value
Variable life asset requirementsMust be kept in a separate account at least equal to the reserves and other contract liabilities
Regulators for Variable LifeSEC, FINRA (Financial Industry Regulatory Authority), NASD (Nationsl Association of Securities Dealers), Insurance Department
Requirements to sell Variable LifeSecurities license, license to sell life insurance
Variable Universal LifeFlexible Premium, increasing or descreasing amount of insurance, cash withdrawals/loans
Types of Specialized PoliciesJJS - Joint Life (First-to-die), Juvenile ("jumping juvenile") (death benefit goes up at 21), Survivorship Life (Second-to-Die) (can be used to defray estate tax)
Group Life Insurance considerationsUCEC - Underwriting (based on large group), Characteristics of Group Plans, Eligible Groups (companies, unions, etc.), Conversion to individual policy (Right to convert within 31 days of leaving group)
Characteristics of Group PlansPTSF - Purpose of the group (can't be for life insurance), Turnover of the group (younger people coming in, olders people going out), Size of the Group (Larger the better), Financial Strength of the Group (les likely to default on premiums)

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