Life Insurance Concepts and Policies

These flashcards cover key vocabulary and concepts related to life insurance, including types of policies, risk classifications, and important terms in policy provisions.

Human Life Value Approach

Estimates the probable future earnings of the insured based on wages, inflation, years to retirement, and time value of money.

Needs Approach

Predicts the financial needs of a family using DIME: Debt, Income, Mortgage, and Expenses.

Risk Classifications

Categories for assessing risk, including Preferred, Standard, and Substandard classifications.

Level Term Life Insurance

A type of insurance providing pure protection for a specific term with level premiums.

Annual Renewable Term

A term insurance policy that renews each year without proof of insurability, with increasing premiums.

Decreasing Term Insurance

Insurance where coverage decreases as debt decreases, suitable when protection needs decline.

Straight Life Insurance

A whole life policy with a level death benefit and premiums paid until death or age 100.

Limited Pay Life Insurance

Coverage remains until death or age 100, with premiums paid for a limited time.

Adjustable Life Insurance

A policy with flexible components: coverage, premium, and plan type.

Universal Life Insurance

A type of flexible premium policy with interest-sensitive cash value and adjustable coverage.

Joint Life Insurance

A policy insuring two or more individuals with benefits paid upon the first death.

Survivorship Life Insurance

Insurance covering two people, paying benefits upon the death of the second insured.

Family Income Policy

Combines whole life and term insurance to provide income for dependents.

Mortgage Redemption Policy

Coverage equal to mortgage amount, ensuring repayment if the insured dies.

Grace Period

A specified time frame during which the policyholder remains covered after a missed premium payment.

Incontestable Period

A 2-year period during which an insurer cannot contest a death benefit claim.

Free Look Period

A time frame allowing policyholders to cancel a new policy for a full refund of premiums.

Ownership Clause

Specifies the rights of the policy owner, including making changes to the policy.

Assignment Clause

Allows the policy owner to transfer ownership of the policy either permanently (absolute) or temporarily (collateral).