Iowa Life Insurance: Final Exam
|62 Questions and Answers
Group Life Insurance - -life insurance that provides a master policy for a
group; each eligible group member receives a certificate of insurance
- Individual Life Insurance - -purchased by individuals; usually greater face
value
- Permanent Life vs. Term Life - -Perm Life: whole life insurance that is
effective for the entire life of the insured up to age 100.
Term Life: insurance that is effective for a temporary time period, designated
by the policy.
- Participating Life vs. Nonparticipating Life - -Participating Life: policies that
pay dividends to the policy holders.
Nonparticipating Life: policies that pay dividends to shareholders.
- Fixed Life vs. Variable Life - -Fixed Life: policies earn a constant rate of
interest, providing guaranteed minimum of benefits.
Variable Life: policies earn a fluctuating rate of interest & don't guarantee a
certain cash value.
- Ordinary (Straight) Life - -basic whole life insurance with a level face
amount, & level premiums payable over the insured's entire life.
- Limited Payment (LP) Whole Life Policies - -the insured is covered for their
entire life, but premiums are pad for a limited time.
- Single Premium Whole Life Policies - -allows the insured to pay the entire
premium in one lump-sum, & have coverage for the insured's entire life.
- Adjustable Life - -a mix of whole & term life insurance.
Changes that can be made to the policy:
- raise/lower premium
-raise/lower the face amount
-change the coverage period
- change the premium-paying period
- Universal Life Insurance - -permanent cash-value insurance that combines
term insurance (death benefits) with a tax-sheltered savings/investment
account that pays interest, usually at competitive money market rates
, - Variable Whole Life - -has fixed premiums & a guaranteed minimum death
benefit just like OWL, but differs b/c it offers higher interest rates defending
the policyowner against inflation
- Variable Universal Life - -product that blends many features of whole life,
universal life, and variable life. Key features are premium flexibility, cash
value investment control, and death benefit flexibility.
- Interest Sensitive Whole Life - -Premiums vary to reflect the insurer's
changing assumptions with regard to death investment and expense factors.
- Equity-Indexed Universal Life - -Equity-indexed universal life works the
same way as universal life insurance except the interest rate is tied to a
stock market index.
- Term Life Insurance - -Insurance that provides financial protection from
losses resulting from a death during a definite period, or term.
- Level Term - -premiums and death benefits stay the same for the life of
the policy
- Decreasing Term - -A type of life insurance that features a level premium
and a death benefit that decreases each year over the duration of the policy.
- Return of Premium - -The longer the term, the lower the premiums;
premiums are returned to the insured if no death benefit has been paid & are
not taxable.
- Annually Renewable Term - --Renews each year without proof of
insurability
-Premiums increase due to attained age
- Increasing Term - -provides an increasing face amount over time based on
specific amounts or a percentage of the original face amount.
- Special Features - -Renewable Term: Policies that allow the policyowner to
renew the term policy after the designated term expires w/o having to prove
insurability.
Convertible Term: Policies that allow policyowners to convert their term
insurance into permanent policies w/o showing proof of insurability.
- Single Premium Immediate Annuity (SPIA) - -A lump-sum payment is made
w/ the insurer & payments to the annuitant start immediately,
- Single Premium Deferred Annuity (SPDA) - -A deferred annuity purchase
with a lump sum
|62 Questions and Answers
Group Life Insurance - -life insurance that provides a master policy for a
group; each eligible group member receives a certificate of insurance
- Individual Life Insurance - -purchased by individuals; usually greater face
value
- Permanent Life vs. Term Life - -Perm Life: whole life insurance that is
effective for the entire life of the insured up to age 100.
Term Life: insurance that is effective for a temporary time period, designated
by the policy.
- Participating Life vs. Nonparticipating Life - -Participating Life: policies that
pay dividends to the policy holders.
Nonparticipating Life: policies that pay dividends to shareholders.
- Fixed Life vs. Variable Life - -Fixed Life: policies earn a constant rate of
interest, providing guaranteed minimum of benefits.
Variable Life: policies earn a fluctuating rate of interest & don't guarantee a
certain cash value.
- Ordinary (Straight) Life - -basic whole life insurance with a level face
amount, & level premiums payable over the insured's entire life.
- Limited Payment (LP) Whole Life Policies - -the insured is covered for their
entire life, but premiums are pad for a limited time.
- Single Premium Whole Life Policies - -allows the insured to pay the entire
premium in one lump-sum, & have coverage for the insured's entire life.
- Adjustable Life - -a mix of whole & term life insurance.
Changes that can be made to the policy:
- raise/lower premium
-raise/lower the face amount
-change the coverage period
- change the premium-paying period
- Universal Life Insurance - -permanent cash-value insurance that combines
term insurance (death benefits) with a tax-sheltered savings/investment
account that pays interest, usually at competitive money market rates
, - Variable Whole Life - -has fixed premiums & a guaranteed minimum death
benefit just like OWL, but differs b/c it offers higher interest rates defending
the policyowner against inflation
- Variable Universal Life - -product that blends many features of whole life,
universal life, and variable life. Key features are premium flexibility, cash
value investment control, and death benefit flexibility.
- Interest Sensitive Whole Life - -Premiums vary to reflect the insurer's
changing assumptions with regard to death investment and expense factors.
- Equity-Indexed Universal Life - -Equity-indexed universal life works the
same way as universal life insurance except the interest rate is tied to a
stock market index.
- Term Life Insurance - -Insurance that provides financial protection from
losses resulting from a death during a definite period, or term.
- Level Term - -premiums and death benefits stay the same for the life of
the policy
- Decreasing Term - -A type of life insurance that features a level premium
and a death benefit that decreases each year over the duration of the policy.
- Return of Premium - -The longer the term, the lower the premiums;
premiums are returned to the insured if no death benefit has been paid & are
not taxable.
- Annually Renewable Term - --Renews each year without proof of
insurability
-Premiums increase due to attained age
- Increasing Term - -provides an increasing face amount over time based on
specific amounts or a percentage of the original face amount.
- Special Features - -Renewable Term: Policies that allow the policyowner to
renew the term policy after the designated term expires w/o having to prove
insurability.
Convertible Term: Policies that allow policyowners to convert their term
insurance into permanent policies w/o showing proof of insurability.
- Single Premium Immediate Annuity (SPIA) - -A lump-sum payment is made
w/ the insurer & payments to the annuitant start immediately,
- Single Premium Deferred Annuity (SPDA) - -A deferred annuity purchase
with a lump sum
