Nevada Life & Health Insurance Questions and Answers |Expert Verified
2024\2025
term insurance - ✔temporary protection because it only provides coverage for a specific period of time
face amount - ✔death benefit
3 basic types of term coverage - ✔level, increasing, decreasing
- based on how the face amount changes during the policy term
What is the premium in term insurance? - ✔regardless of type of term insurance purchased, premium is
level throughout the term of policy
level term insurance - ✔death benefit does not change throughout the life of the policy
annually renewable term - ✔premium increases annually according to the attained age, guaranteed to
be renewable each year
decreasing term - ✔level premium and death benefit that decreases each year over duration of the
policy term
increasing term - ✔level premium and death benefit that increases each year over the duration of the
policy term
return of premium life insurance - ✔an increasing term policy that pays an additional death beneficiary
equal to the amount of the premiums paid
- return of premium is paid if the death occurs within a specified period of time or if the insured outlives
the policy term
renewable provision - ✔allows the policyowner the right to renew coverage at the expiration date
without evidence of insurability
convertible provision - ✔provides the policyowner the right to convert the policy to a permanent
insurance policy without evidence of insurability
permanent life insurance - ✔general term used to refer to various forms of life insurance policies that
build cash value and remain in effect for the entire life of the insured (or until age 100) as long as
premium is paid
nonforteiture value - ✔aka cash value, does not usually accumulate until the third policy year and it
grows tax deferred
key characteristics of whole life insurance - ✔- level premium
- death benefit
,- cash value
- living benefits
3 basic forms of whole life insurance - ✔1. straight (ordinary) whole life
2. limited-pay whole life
3. single premium whole life
straight life - ✔basic whole life policy; policy owner pays the premium from the lime the policy is issued
until insured's death or age 100
- has lowest annual premium
limited-pay whole life - ✔designed so that premiums for coverage will be completely paid-up well before
age 100
- cash value builds up faster
single premium whole life - ✔designed to provide a level death benefit to the insured's age 100 for a
one-time, lump-sum payment
- generate immediate cash value
adjustable life - ✔can assume the form of either term insurance or permanent insurance; insured
typically determines how much coverage is needed and the affordable amount of premium
adjustable life cash value - ✔only develops when the premiums paid are more than the cost of the policy
universal life (flexible premium adjustable life) - ✔policyowner has the flexibility to increase/decrease
amount of premium paid into policy; policyowner may skip paying a premium and policy will not lapse as
long as there is sufficient cash value at the time to cover monthly deductions for cost of insurance
universal life premium types - ✔1. minimum premium: amount needed to keep policy in force for year
2. target premium: recommended amount to keep policy in force for lifetime
2 death benefit options for universal life - ✔1. Option A
2. Option B
Option A (Level Death Benefit option) - ✔death benefit remains level while cash value gradually
increases, lowing the "pure insurance" with insurer in later years
, - death benefit increases near the end in order to maintain gap between cash value and death benefit in
life insurance policy
Option B (Increasing Death Benefit option) - ✔death benefit includes annual increase in cash value so
that death benefit gradually increases each year by amount that cash value increases
- pure insurance remains level for life
variable whole life - ✔level, fixed premium, investment-based product; cash value of policy is not
guaranteed and fluctuates with performance of the portfolio in which premiums have been invested by
insurer
variable universal life - ✔combination of universal life and variable life; provides policy owner with
flexible premiums and adjustable death benefit, policyowner decides where cash value will be invested
(not guaranteed)
interest-sensitive whole life - ✔whole life policy that provides a guaranteed death benefit to age 100 and
for a minimum guaranteed rate of interest
indexed whole life - ✔cash value is dependent upon the performance of the equity index although there
is a guaranteed minimum interest rate
joint life - ✔single policy that is designed to insure two or more lives; premium is less than for same type
for individuals
survivorship life (second to die) - ✔same as joint life except pays on the last death rather than upon the
first death; joint life expectancy is extended, resulting in lower premium
annuity - ✔a contract that provides income for a specified period of years, or for life; protects a person
against outliving his or her money
annuity owner - ✔purchaser of annuity contract, not necessarily the one who receives benefits; has all
the rights
annuitant - ✔person who receives benefits or payments from annuity, whose life expectancy is taken
into consideration, and for whom the annuity is written; must be a natural person
annuity beneficiary - ✔person who receives annuity assets if the annuitant dies during the accumulation
period, or to whom the balance of annuity benefits is paid out
accumulation period - ✔period of time over which the owner makes payments (premiums) into an
annuity; payments earn interest on tax-deferred basis
annuitization period - ✔the time during which the sum that has been accumulated is converted into a
stream of income payments for the annuitant
absolute assignment - ✔involves transferring all rights of ownership to another person or entity
2024\2025
term insurance - ✔temporary protection because it only provides coverage for a specific period of time
face amount - ✔death benefit
3 basic types of term coverage - ✔level, increasing, decreasing
- based on how the face amount changes during the policy term
What is the premium in term insurance? - ✔regardless of type of term insurance purchased, premium is
level throughout the term of policy
level term insurance - ✔death benefit does not change throughout the life of the policy
annually renewable term - ✔premium increases annually according to the attained age, guaranteed to
be renewable each year
decreasing term - ✔level premium and death benefit that decreases each year over duration of the
policy term
increasing term - ✔level premium and death benefit that increases each year over the duration of the
policy term
return of premium life insurance - ✔an increasing term policy that pays an additional death beneficiary
equal to the amount of the premiums paid
- return of premium is paid if the death occurs within a specified period of time or if the insured outlives
the policy term
renewable provision - ✔allows the policyowner the right to renew coverage at the expiration date
without evidence of insurability
convertible provision - ✔provides the policyowner the right to convert the policy to a permanent
insurance policy without evidence of insurability
permanent life insurance - ✔general term used to refer to various forms of life insurance policies that
build cash value and remain in effect for the entire life of the insured (or until age 100) as long as
premium is paid
nonforteiture value - ✔aka cash value, does not usually accumulate until the third policy year and it
grows tax deferred
key characteristics of whole life insurance - ✔- level premium
- death benefit
,- cash value
- living benefits
3 basic forms of whole life insurance - ✔1. straight (ordinary) whole life
2. limited-pay whole life
3. single premium whole life
straight life - ✔basic whole life policy; policy owner pays the premium from the lime the policy is issued
until insured's death or age 100
- has lowest annual premium
limited-pay whole life - ✔designed so that premiums for coverage will be completely paid-up well before
age 100
- cash value builds up faster
single premium whole life - ✔designed to provide a level death benefit to the insured's age 100 for a
one-time, lump-sum payment
- generate immediate cash value
adjustable life - ✔can assume the form of either term insurance or permanent insurance; insured
typically determines how much coverage is needed and the affordable amount of premium
adjustable life cash value - ✔only develops when the premiums paid are more than the cost of the policy
universal life (flexible premium adjustable life) - ✔policyowner has the flexibility to increase/decrease
amount of premium paid into policy; policyowner may skip paying a premium and policy will not lapse as
long as there is sufficient cash value at the time to cover monthly deductions for cost of insurance
universal life premium types - ✔1. minimum premium: amount needed to keep policy in force for year
2. target premium: recommended amount to keep policy in force for lifetime
2 death benefit options for universal life - ✔1. Option A
2. Option B
Option A (Level Death Benefit option) - ✔death benefit remains level while cash value gradually
increases, lowing the "pure insurance" with insurer in later years
, - death benefit increases near the end in order to maintain gap between cash value and death benefit in
life insurance policy
Option B (Increasing Death Benefit option) - ✔death benefit includes annual increase in cash value so
that death benefit gradually increases each year by amount that cash value increases
- pure insurance remains level for life
variable whole life - ✔level, fixed premium, investment-based product; cash value of policy is not
guaranteed and fluctuates with performance of the portfolio in which premiums have been invested by
insurer
variable universal life - ✔combination of universal life and variable life; provides policy owner with
flexible premiums and adjustable death benefit, policyowner decides where cash value will be invested
(not guaranteed)
interest-sensitive whole life - ✔whole life policy that provides a guaranteed death benefit to age 100 and
for a minimum guaranteed rate of interest
indexed whole life - ✔cash value is dependent upon the performance of the equity index although there
is a guaranteed minimum interest rate
joint life - ✔single policy that is designed to insure two or more lives; premium is less than for same type
for individuals
survivorship life (second to die) - ✔same as joint life except pays on the last death rather than upon the
first death; joint life expectancy is extended, resulting in lower premium
annuity - ✔a contract that provides income for a specified period of years, or for life; protects a person
against outliving his or her money
annuity owner - ✔purchaser of annuity contract, not necessarily the one who receives benefits; has all
the rights
annuitant - ✔person who receives benefits or payments from annuity, whose life expectancy is taken
into consideration, and for whom the annuity is written; must be a natural person
annuity beneficiary - ✔person who receives annuity assets if the annuitant dies during the accumulation
period, or to whom the balance of annuity benefits is paid out
accumulation period - ✔period of time over which the owner makes payments (premiums) into an
annuity; payments earn interest on tax-deferred basis
annuitization period - ✔the time during which the sum that has been accumulated is converted into a
stream of income payments for the annuitant
absolute assignment - ✔involves transferring all rights of ownership to another person or entity
