Life and Health Insurance Policies Questions and Answers 100% Pass

Life and Health Insurance Policies Questions and Answers 100% Pass 3 basic types of coverage for life insurance ordinary, industrial, group Ordinary Life Insurance Individual life insurance that includes many types of temporary and permanent insurance protection plans -Premiums are normally paid monthly, quarterly, semiannually, or annually - "Principal type of life insurance" that includes insurance such as whole, term, universal, and variable life coverage as well as endowment policies Industrial Life Insurance Characterized by comparatively small issue amounts (ex 1,000) with premiums collected on a weekly or monthly basis -Provides insurance coverage to industrial workers or people who are unable to afford insurance for bigger amounts -Quite often marketed and purchased as burial insurance Group Insurance Is written for employer, employee groups, associations, unions, and creditors to provider coverage for a number of individuals under one contract -Underwriting based on the group not the indivual Term Life Insurance Provides low-cost insurance protection for a specified period (term) and pays a benefit only if the insured dies during that period -NO CASH VALUE -Bought $50k 20yr plan Dies before 20yrs ==>gets $50k Dies after 20yrs ==>gets nothing -Term life provides the greatest amount of death benefit per dollar of initial cash outlay 3 Basic Forms of Term Life Level term Decreasing term Increasing term Level Term Insurance Provides policy with level (same as original) amount of protection over the entire term of the policy -Have level premiums Decreasing Term Insurance Policies that are characterized by benefit amounts that DECREASE GRADUALLY over the term of protection -Have level premiums Ex. 20 yr 50k decreasing term Pays 50k death benefit at beginning of policy term-------------decreasing-----------> Pays 0 at the end of 20 yrs Credit life insurance, sold to cover the outstanding balance on a loan, is based on decreasing term insurance. True Decreasing term insurance is commonly used to protect an insured's mortgage Mortgage 500k-----400k------200k-----0 Decreasing term coverage 500k-----400k------200k-----0 (Amount of cover reduces roughly in line