Life Insurance prepartation

Term Life Insurance

Temporary coverage for a specific period; no cash value; lowest initial premium.

Level Term

Death benefit stays the same for the entire term.

Decreasing Term

Death benefit decreases over time; often used for mortgages.

Increasing Term

Death benefit increases over time to offset inflation.

Renewable Term

Allows renewal without evidence of insurability; premiums increase at renewal.

Convertible Term

Allows conversion to permanent insurance without medical exam.

Return of Premium Term (ROP)

Refunds premiums if insured outlives the term.

Whole Life Insurance

Permanent coverage with guaranteed cash value and level premiums.

Straight/Ordinary Whole Life

Premiums paid for life; lowest annual whole-life premium.

Limited-Pay Whole Life

Premiums paid for a limited time (10-pay, 20-pay); higher cost per payment.

Single-Premium Whole Life

One lump-sum payment creates a fully paid policy; builds immediate cash value.

Modified Whole Life

Lower premiums early, then premiums jump to a higher level permanently.

Graded Whole Life

Premiums increase gradually over several years, then level out.

Interest-Sensitive Whole Life

Cash value and premium can vary based on current interest rates.

Indeterminate Premium Whole Life

Premiums fluctuate based on insurer expenses and investment returns.

Enhanced/Economatic Whole Life

Combines whole life with term additions using dividends.

Universal Life (UL)

Flexible premiums, adjustable death benefit, cash value grows based on interest crediting.

UL Option A

Level death benefit.

UL Option B

Increasing death benefit (face amount + cash value).

Variable Life

Cash value invested in separate accounts; values fluctuate; no guarantees.

Variable Universal Life (VUL)

Combines UL flexibility with variable investment options.

Indexed Universal Life (IUL)

Cash value grows based on stock index performance with caps/floors.

Adjustable Life

Allows adjustment of premium, face amount, and type (term/permanent).

Joint Life (First-to-Die)

Pays death benefit on the first of two or more insureds.

Survivorship Life (Second-to-Die)

Pays only after both insureds die; used for estate planning.

Juvenile Life

Life insurance on a minor; usually increasing at a certain age.

Jumping Juvenile

Face amount increases (often x5) at age 21.

Credit Life

Covers a borrower's loan balance; decreasing term.

Level Premium

Premium remains the same throughout the policy.

Flexible Premium

Policyowner can increase, decrease, or skip premiums.

Single Premium

One lump-sum payment funds the entire policy.

Limited-Pay Premium

Premiums paid for a set period (10 years, 20 years, etc.).

Modified Premium

Lower at first, then permanently increased.

Graded Premium

Increases gradually for several years before leveling.

Target Premium

Suggested premium that keeps a UL policy funded.

Mortality Factor

Cost based on probability of death.

Interest Factor

Insurers invest premiums to reduce cost.

Expense Factor

Operating and administrative costs.

Waiver of Premium Rider

Insurer waives premiums if the insured becomes disabled.

Waiver of Monthly Deductions Rider

Waives monthly charges on UL policies during disability.

Payor Benefit Rider

Waives premiums if the policyowner (not insured) dies or becomes disabled; used for juveniles.

Disability Income Rider

Provides monthly income during disability.

Accelerated Death Benefit Rider

Pays part of the death benefit early if diagnosed with terminal illness.

Chronic Illness Rider

Pays benefits when unable to perform ADLs.

Critical Illness Rider

Pays lump sum for illnesses like heart attack or stroke.

Long-Term Care (LTC) Rider

Pays for long-term care expenses using death benefit.

Accidental Death Rider

Pays extra benefit if death is accidental.

AD&D Rider

Pays extra for accidental death and for specific dismemberments.

Guaranteed Insurability Rider (GIR)

Allows purchase of more coverage without medical exam.

Cost of Living Adjustment Rider (COLA)

Automatically increases coverage based on inflation index.

Return of Premium (ROP) Rider

Returns premiums paid upon death.

Return of Cash Value Rider

Death benefit includes face amount + accumulated cash value.

Term Rider

Adds term coverage on top of a whole life policy.

Spouse Term Rider

Term insurance for spouse.

Child Term Rider

Term coverage for children; often convertible.

Family Term Rider

Combines spouse + children term.

Other Insured Rider

Adds coverage for another person (business partner, etc.).

Paid-Up Additions Rider (PUA)

Uses dividends to buy small chunks of paid-up whole life.

Guaranteed Purchase Option

Buy more coverage at specified ages/events.

Immediate Annuity

Payments begin within 12 months of purchase.

Deferred Annuity

Payments begin more than 12 months after purchase.

Single Premium Annuity

One-time lump-sum contribution.

Flexible Premium Annuity

Payments made however and whenever the owner chooses.

Level Premium Annuity

Equal, regular payments into the annuity.

Life Only Annuity

Pays for life only; highest payout.

Life With Period Certain

Pays for life, but guarantees payment for a minimum period.

Life With Refund

Guarantees beneficiary receives unused balance.

Joint Life

Stops after the first death.

Joint and Survivor

Continues after first death—sometimes at reduced rate.

Period Certain Annuity

Pays for a fixed period only.

Fixed Annuity

Guarantees interest rate and fixed payments.

Variable Annuity

Payments vary with investment performance in separate accounts.

Indexed Annuity

Interest tied to a stock index with caps and floors.