Type Of Insurance Policies

. A level term policy pays the same benefit amount if death occurs at any point during the term. Level term policies may be renewable.

Whole life provides the insured with a cash value as well as a level face amount.

Modified Endowment Contract A policy that is overfunded to where it does not meet the 7-pay test is considered a Modified Endowment Contract.

Joint Life Policy A policy that promises to pay the face amount on the death of first of 2 lives covered by the policy is called a Joint Life Policy.

partial withdrawal features beyond a surrender charge period

When the insured dies or at the policy's maturity date, whichever happens first

Modified Whole Life

Whole Life

The cost of insurance is most important when an insured owner is trying to decide whether to convert term insurance at the insured's original age or the insured's attained age.

Convertible Term

Limited Pay Life

Variable Universal Life is comprised of monthly mortality charges and self directed investment choices.

Variable Life products require a producer to hold a Life Insurance license and a Securities license.

Renewable Term policies guarantee the insured the right to continue term coverage after expiration of the initial policy period. 10

Modified Whole Life

issued in an amount not to exceed the amount of the loan Credit life insurance is designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid.

Survivorship A survivorship life policy insures two individuals and is designed to pay a benefit upon the second death.

20-Pay Life accumulates cash value faster than Straight Life

A minimum guaranteed Death benefit is provided.

Whole Life

Decreasing term policy

A payor provision provides that in the event of death or disability of the adult premium payor, the premiums on a juvenile policy will be waived until the insured child reaches a specified age or the maturity date of the contract.

Cash value may be borrowed against

the renewal premium is calculated on the basis of the insured's attained age

Universal Life is designed to provide flexible premiums and an adjustable death benefit.

Premiums may be applied as a credit against income tax

Conversion The conversion provision allows the policysowner to change the policy to a permanent life policy without providing evidence of insurability.

Variable Life A life insurance policy that has a level premium but allows the policyowner to choose from a selection of investment options is known as Variable Life.

will lose many of its tax advantages

Family Maintenance policy a Family Maintenance policy should be purchased. A Family Maintenance policy pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period.

Ten-Year Endowment a Ten-Year Endowment should be purchased to ensure the funds will be available when needed.

Term insurance would provide the greatest amount of protection for a limited period of time.

A Renewable Term Policy is renewable at the option of the insured.

A Joint Life and Survivor policy pays benefits after the death of the last insured.

increase face amount

level

policyowner The policyowner (investor) benefits upon the death of the insured.

Endowment at Age 65 An endowment policy is characterized by cash values that grow at a rapid pace so that the policy matures or endows at a specified date (before age 100).

decreasing term rider

L's spouse dies at age 66.

When a life insurance policy exceeds certain IRS table values, the result would create a Modified Endowment Contract (MEC).

the cash value. In a Universal Life Policy, income is usually directed toward the cash value.

does not guarantee a return on its investment accounts. In contrast, variable insurance products do not guarantee contract cash values, and it is the policyowner who assumes the investment risk. Variable life insurance contracts do not make any promises as to either interest rates or minimum cash values.

30 Pay Life Limited pay whole life policies have level premiums that are limited to a certain period.

the insured's total loan value. With a group credit life policy, the amount of insurance on the life of a debtor is limited to the total amount of the insured's loan.

Variable Whole Life policies have a fixed, level premium.

Equity index insurance. Equity index insurance yields greater gains than bonds but will still protect the principal with a minimum of risk

$20,000 death benefit If the insured dies before the endowment's maturity, the policy's face value — also known as the "death benefit" — is paid in a lump sum to any beneficiaries.

Life Paid-Up at Age 70

Conversion privilege The conversion privilege allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability.

Universal Life. Universal life insurance is characterized by flexible premiums and an adjustable death benefit.

Modified Premium Life Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter.

Face amount plus the policy's cash value. . A Face Amount Plus Cash Value Policy is a contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value.

Variable Life. The cash value and death benefits of a Variable Life policy can fluctuate according to the performance of its underlying investment portfolio.

10 years. the family would receive an income from the policy for 10 years. Family Income policies pay an income beginning at the insured's death and continues for a period specified from the date of policy issue.

Policyowner controls where the investment will go and selects the amount of the premium payment With Variable Universal Life, the policyowner controls the investment of cash values and selects the timing and amount of premium payments.

flexible premiums As financial needs and objectives change, the policyowner can make adjustments to the premium and/or face amount.

A Whole Life Policy with an Other Insured Rider

upon the insured's death during the term of the policy Term life policies can only mature (pay out the face amount) if death occurs during the term of the policy.

face amount can be adjusted using policy dividends

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

"Universal Life". A Universal Life policy has a cash value that may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

A joint life policy covers two or more people. Using some type of permanent insurance (as opposed to term), it pays the death benefit at the first insured's death.

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract. Policies that do not meet the 7-pay test are considered MEC's and will lose favorable tax treatment. The test is designed to discourage premium schedules that would result in a paid-up policy before the end of a seven year period.

20-pay Life The shorter the pay period, the faster the cash value growth.

premium payments limited to a specified number of years

Whole life policy with other insured rider

Cost of insurance

Decreasing Term

The premiums can be lowered or raised, based on investment performance

Expires at the end of the policy period

decreasing term policy has a death benefit that adjusts periodically and is written for a specific period of time.

A Variable Life policy offers the owner investment in products such as money-market funds, long-term bonds, or equities.

Conversion provision

20-pay life

Modified Whole Life

life insurance written to cover a need for a specified period of time at the lowest premium is called level term insurance.

A Family Maintenance Policy pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period.

It varies according to the contracts The conversion period varies according to the contracts.

Term The type of insurance used is decreasing term, with the term matched to the length of the loan period (though usually limited to 10 years or less) and the decreasing insurance amount matched to the declining loan balance.

"There is a flexible premium payment". An Interest-Sensitive Whole Life policy is characterized by premiums that vary to reflect the insurer's changing assumptions regarding its death, investment, and expense factors.

age 100 Even though the premium payments are limited to a certain period, the insurance protection extends until the insured's death, or to age 100.

Variable Life Because of the transfer of investment risk from the insurer to the policyowner, variable insurance products are considered securities contracts as well as insurance contracts.

Term rider Family plan policies usually cover the family head with permanent insurance and the coverage on the spouse and children is term insurance in the form of a rider.

Variable Universal Life combines investment choices with a form of Term coverage.

ariable Whole Life Insurance is both an insurance and securities product.

Child term rider The means of providing life insurance on the children of a person who is covered by a life insurance policy is by a child term rider.

A Variable Life Policy has investment values based instruments such as mutual funds, stocks, and bonds.

Premiums are payable for as long as there is insurance coverage in force t. Straight whole life provides permanent level protection with level premiums from the time the policy is issued until the insured's death (or age 100).

15-year decreasing term

Cash value equals the death benefit

Family Maintenance Policy

Decreasing Term insurance". A Family Income Policy is a combination of Whole Life and Decreasing Term insurance.

The duration of premium payments

Decreasing Term The Automatic Premium Loan provision can be incorporated into all of these policies EXCEPT decreasing term.