Life Insurance chapter 4 2023/2024 Rated A

Life Insurance chapter 4 2023/2024 Rated A term insurance temporary, only provides coverage for a specific period of time pure life insurance is also known as term life insurance tem policies provide the greatest amount of coverage for the lowest amount of premium pure death protection if the insured dies during this term, the policy pays the death benefit to the beneficiary - if the policy cancels or expires prior to the death of the insured, nothing is payable at the end of the term - there is no cash value or other living benefits what are the three basic types of term coverage? 1. level 2. increasing 3. decreasing what is the most common type of temporary protection purchased level term insurance level refers to the death benefit that does not change throughout the life of the policy level premium term provides a level death benefit and a level premium during the policy term ART Annually Renewable Term the purest form of term insurance. the death benefit remains level and the policy may be guaranteed to be renewed each year without proof of insurability but the premium increases annually according to the attained age, as the probability of death increases In NY the maximum age in which coverage will not be offered is 80 most term policies are either renewable or convertible renewable allows the policy to be renewed at the expiration date w/o evidence of insurability convertible right to convert the policy to a permanent insurance policy w/o evidence of insurability permanent life insurance build cash value and remain in effect for the entire life of the insured as long as the premium is paid whole life insurance lifetime protection and includes a savings element .. they endow at the age of 100. so the policy is scheduled to equal he face amount at the end of the policy at age 100 premiums for whole life policies are usually higher than for term life policies key characteristics of whole life insurance - level premium - death benefit - cash value - living benefits death benefit guaranteed and remains level for life cash value created by accumulation of premium, is scheduled to equal face amount of the policy when the insured ages 100 living benefits policyowner can borrow against the cash value, the value does not accumulate until the third year and it is tax deferred what are the 3 basic forms of whole life insurance? straight whole life, limited-pay whole life and single premium whole life continuous premium = straight life basic, lowest annual premiums .. pay until 100 limited payment whole life premiums for coverage will be completely paid up well before 100. shorter premium paying period = higher premium . cash value builds up faster single premium whole life one time lump sum payment .. will provide level death benefit up until 100. generates immediate cash fixed index life cash value is dependent upon performance of the equity index, classified depending on whether the policyowner or the insurer assumes inflation risk flexible premium policies offer unique features based on how the policy owner pays the premium or how the premium is invested universal life policyower has the flexibility to increase the amount of premium paid into the policy and to later decrease it again. .. insurers may give option to pay minimum or target premium minimum premium is the amount needed to keep the policy in force for the current year target premium a recommend amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime universal life policy has what two components ? insurance component and cash account insurance component of a universal life policy is always annually renewable term insurance universal life death benefit options Option A = level death benefit Option B = Increasing Death Benefit option A level death benefit death benefit remains level while he cash value gradually increases ... lowering pure insurance , lowering expenses, allowing for greater cash value in the years to come option B increasing death benefit the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. variable life insurance a level, fixed premium, investment-based product , the cash value of the policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer how are variable life insurance policies regulated ? dually regulated by the state and federal government agents selling variable life insurance products must be 1. registered with FINRA 2. Have a securities license 3. be licensed by the state to sell life insurance joint life single policy designed to insure two o more lives in a joint life policy, premium is based on joint average age that is between the ages of the insureds in a joint life policy, death benefit is paid upon the first death only buy-sell agreement a business continuation agreement that determines what will be done with the business in the event that an owner dies or becomes disabled survivorship life it insures two or more lives for a premium hat is based on a joint age. pays on the last death ... joint life expectancy is extended, resulting in lower premium than that which is typically charged for joint life .. typically used to offset the liability of the estate tax upon the death of the last insured how old is a minor in NY? 14 1/2 a policy on a minor under 14 and 1/2 may not be in excess of $50,000 or 50% of the amount of life insurance in force upon the life of the person policies for a minor may exceed certain limits if the policy is purchased by and the premiums are paid by a person having an insurable interest in the life of the minor - minor is not dependent upon the owner of the policy for support and maintenance credit insurance is a insurance written to insure the life of the debtor and pay off the balance of the loan in the event of the death of the debtor in credit life, the creditor is the owner and the beneficiary of the policy and premiums are paid by the borrower. group life insurance is issued to the sponsoring organization and covers the lives of more than one individual member of that group. .. normally written as annually renewable term insurance what are the two features that distinguished group insurance from individual insurance ? - evidence of insurability is usually not required - participants under the plan do not receive a policy because they do not own or control certificate of insurance evidencing that they have coverage master policy is issued to the sponsor of the group which is often an employer What are the characteristics of group plans ? - purpose of the group - size of the group - turnover of the group - financial strength of the group purpose of the group the group must be created for a purpose other than to obtain group insurance size of the group the larger the # of ppl in the group the more accurate the projections of future loss experience will be. Law Of Large Numbers turnover of the group a group should have a steady turnover, younger lower-risk employees enter the group, and older, higher risk employees leave financial strength of the group consider whether or not the group has financial resources to pay the policy premiums , or whether or not they would be able to renew the coverage cost of coverage in group underwriting based on average age of the group and the ratio of men to women group underwriting requirements if the group is large enough there are no medical questions since the plan will be issued based upon the nature of the group and the groups past claims experience conversion to individual policy the employee has the right to convert to an individual policy without proving insurability at a standard rate based on the individual's attained age how many days does an employee have after terminating from the group in order to exercise the conversion option ? 31 days and during this time the employee is still covered two components of a universal policy insurance and cash account