Life Insurance Policy Types

What is term life insurance?

Temporary death-benefit protection, generally without cash value.

What happens if a term policy expires while the insured lives?

Coverage ends without a death benefit.

What does level term mean?

Death benefit stays constant during the specified term.

What does decreasing term mean?

Death benefit declines over the policy term.

What need often fits decreasing term coverage?

Paying off a declining mortgage balance.

What is annually renewable term (ART)?

One-year term insurance renewable each year, usually at rising premiums.

What does a renewable term provision allow?

Renewal without new evidence of insurability.

What does a convertible term provision allow?

Conversion to permanent life insurance without new underwriting.

At what age are converted-term premiums usually calculated?

The insured's attained age at conversion.

What is return-of-premium term insurance?

Term coverage that refunds qualifying premiums if the insured survives the term.

What is whole life insurance?

Permanent life insurance with guaranteed cash-value features.

What is ordinary (straight) whole life?

Whole life with level premiums generally payable for life or to maturity.

What is limited-pay whole life?

Whole life paid up after a limited number of premium years.

Does coverage end when limited-pay premiums finish?

No; permanent coverage continues under the policy.

What is single-premium whole life?

Permanent insurance funded by one upfront premium.

How does whole-life cash value generally grow?

Under guarantees specified in the contract.

Does traditional whole life generally have a level death benefit?

Yes, for its basic face amount, subject to policy adjustments.

What is universal life (UL)?

Flexible-premium permanent life with interest-credited account value.

What is a key danger of underfunding universal life?

The policy can lapse if charges exhaust its value.

What is universal life's Option A death benefit?

Usually a level specified death benefit, subject to corridor rules.

What is universal life's Option B death benefit?

Usually specified amount plus cash/account value.

What does adjustable life insurance allow?

Contractually permitted changes to premium, benefit, or protection type.

What is interest-sensitive whole life?

Whole life whose nonguaranteed values respond to interest rates.

What is variable whole life?

Permanent life with investment-linked separate-account cash values.

Who usually bears investment risk in variable life?

The policyowner.

What is variable universal life (VUL)?

Flexible-premium UL with investment-linked separate accounts.

What makes indexed universal life different from variable life?

Index-linked crediting formula, not direct stock-market investment.

Are indexed life returns usually identical to an index's actual return?

No; participation, caps, floors, and charges affect crediting.

What is first-to-die joint life insurance?

One policy covering two lives; pays at the first death.

What is second-to-die survivorship life insurance?

One policy covering two lives; pays after the last insured dies.

What planning need often uses survivorship life?

Providing funds after both insureds die, including estate planning.

What is a family protection policy?

Permanent base coverage combined with term coverage for family members.

What is a family income policy?

Whole life plus decreasing term to provide income during a set period.

What is a family maintenance policy?

Whole life plus level term income protection for a set period after death.

What is a jumping juvenile policy?

Juvenile policy whose face amount increases at a stated age.

What is credit life insurance?

Life coverage intended to repay an outstanding debt on death.

Who typically receives proceeds of credit life insurance?

The creditor, up to the insured debt.

What is a key-person life policy?

Business-owned life insurance covering an essential employee.

Who is typically the beneficiary of key-person insurance?

The business.

What is a buy-sell agreement funded by life insurance?

Contract using death proceeds to fund purchase of a deceased owner's interest.

What is employer-owned group life insurance?

Coverage issued under a master policy for eligible members.

Who gets the master policy in employer group life insurance?

The employer or other group policyholder.

What does the covered employee usually receive?

A certificate describing their insurance coverage.

What is a contributory group plan?

Employees contribute toward premiums.

What is a noncontributory group plan?

The group policyholder pays the premiums.

What does group underwriting usually emphasize?

The characteristics of the group, not every individual's full risk.