Types of Life Insurance Policies/ Questions &
Definitions.
term insurance - Answer: insurance offering temporary protection, aka only
provides coverage for a specific period of time
AKA "pure life insurance'
offers the GREATEST amount of coverage for the LOWEST premium
cannot buy or renew after a certain age
decreasing term - Answer: policy that features a level premium and a death
benefit that decreases each year over the duration of the policy term
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, used when the amount of protection is time sensitive or decreases over time (i.e.
mortgage debt or other debts)
increasing term - Answer: policy with level premiums and a death benefit that
increases each year over the duration of the policy term
ideal to handle inflation and the increasing cost of living
often added to another policy as a rider
return of premium - Answer: life insurance that is an increasing term policy that
pays an additional death benefit to the beneficiary equal to the amount of the
premiums paid
renewable - Answer: provision that allows the policyowner the right to renew
coverage at the expiration date WITHOUT evidence of insurability
convertible - Answer: provision that provides the policy owner with the right to
convert the policy to the permanent insurance policy WITHOUT evidence of
insurability
permanent insurance - Answer: general term used to refer to various forms of life
insurance policies that build cash value and remain effective for the entire life of
the insured (or until age 100) as long as the premium is paid
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Definitions.
term insurance - Answer: insurance offering temporary protection, aka only
provides coverage for a specific period of time
AKA "pure life insurance'
offers the GREATEST amount of coverage for the LOWEST premium
cannot buy or renew after a certain age
decreasing term - Answer: policy that features a level premium and a death
benefit that decreases each year over the duration of the policy term
Page 1 of 7
, used when the amount of protection is time sensitive or decreases over time (i.e.
mortgage debt or other debts)
increasing term - Answer: policy with level premiums and a death benefit that
increases each year over the duration of the policy term
ideal to handle inflation and the increasing cost of living
often added to another policy as a rider
return of premium - Answer: life insurance that is an increasing term policy that
pays an additional death benefit to the beneficiary equal to the amount of the
premiums paid
renewable - Answer: provision that allows the policyowner the right to renew
coverage at the expiration date WITHOUT evidence of insurability
convertible - Answer: provision that provides the policy owner with the right to
convert the policy to the permanent insurance policy WITHOUT evidence of
insurability
permanent insurance - Answer: general term used to refer to various forms of life
insurance policies that build cash value and remain effective for the entire life of
the insured (or until age 100) as long as the premium is paid
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