Principles of Risk Management and Insurance: Chapter 11 - Life Insurance

This set of flashcards covers key terms and concepts regarding life insurance, helping students understand the critical elements of risk management in life insurance.

Premature Death

The death of a family head with outstanding unfulfilled financial obligations, leading to financial problems for surviving family members.

Human Life Value Approach

An estimation method for life insurance needs based on the present value of the family’s share of the deceased breadwinner’s future earnings.

Need Approach

A method to estimate the amount of life insurance needed based on the financial needs of dependents after the death of the breadwinner.

Term Life Insurance

A type of life insurance that provides temporary protection and typically expires at the end of the policy period unless renewed.

Ordinary Life Insurance

A level-premium policy that provides lifetime protection and accumulates cash values until the insured reaches age 121.

Variable Life Insurance

A fixed-premium policy that allows death benefits and cash values to fluctuate based on the investment performance of a separate account.

Universal Life Insurance

A flexible premium life insurance policy that provides lifetime protection with an optional cash-value account.

Indexed Universal Life Insurance

A variation of universal life insurance that credits additional interest based on the performance of a specific stock market index.

Group Life Insurance

A type of life insurance that covers a group of people under a single master contract.

Modified Life Policy

A whole life policy that has lower premiums in the initial years and higher premiums thereafter.

Joint Life Insurance

A policy that covers two or more people and pays the death benefit upon the death of the first member.

Second-to-Die Life Insurance

Insurance that covers two or more lives, paying the benefit after the death of the last insured, commonly used in estate planning.