Life Insurance Practice Exam Preparation Flashcards

A set of 30 vocabulary flashcards covering general concepts, terms, and characteristics of life insurance products based on the lecture transcript.

Accidental Death Benefit (ADB)

A type of policy providing benefits for accidental death, loss of sight, speech, hearing, use of limbs, or loss of a member such as an arm or leg.

Adjustable Life Insurance

A permanent life policy offering flexibility in premium amounts and death benefits, with cash value growing at a guaranteed fixed rate.

Attained Age

The age an insured has reached as of a given date, also referred to as current age.

Cash Surrender Value

The amount available in cash when a policyowner surrenders a policy before or after it matures.

Convertible Term Life Insurance

Temporary life insurance that allows the policyowner to exchange the policy for a permanent whole life policy without evidence of insurability.

Decreasing Term Insurance

A type of temporary protection where the face amount reduces each year, often used in conjunction with a debt or loan.

Endowment Contract

A contract that pays a face amount after a fixed period, such as $10$, $20$ years, or at age $65$, or upon the death of the insured if earlier.

Extended Term Insurance

A nonforfeiture option available upon policy surrender that continues the same face amount for a specified period.

Family Income Policy

A policy combining whole life with a decreasing term rider to provide a death benefit and monthly income payments to the beneficiary.

Joint Life Insurance

A policy covering the lives of two or more persons that pays a death benefit and ends when the first insured dies.

Universal Life Insurance

A flexible life insurance policy with flexible premiums and adjustable death benefits, where the accumulation account grows at a guaranteed rate.

Immediate Estate

A fund created instantly for a named beneficiary when a life insurance contract is payable upon the death of the insured.

Term Life Insurance

Pure or temporary protection that provides low-cost insurance for a specified period and pays a benefit only if the insured dies during that period.

Mortgage Redemption Insurance

A decreasing term life insurance policy designed to provide funds to pay off a mortgage if the insured dies before it is fully paid.

Credit Life Insurance

A limited benefit term policy designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before repayment.

Increasing Term Life Insurance

Insurance providing a death benefit that increases at periodic intervals, typically stated as a specific amount or a percentage of the original amount.

Level Term Life Insurance

The most common form of term insurance, providing a constant or fixed amount of coverage (death benefit) for the duration the policy is in force.

Step-up Premium

A steady increase in premium during each renewal period of a term policy, reflecting the insured's increased age and risk.

Annual Renewable Term (ART/YRT)

A basic form of life insurance providing coverage for one year that allows automatic renewal each year without evidence of insurability.

Re-entry Term Insurance

A policy where the insured can renew automatically at a standard rate or undergo a medical exam to qualify for lower premium rates or discounts.

Interim Term Life Insurance

A form of convertible term insurance for individuals seeking immediate coverage who plan to transition to permanent coverage automatically within the first year.

Attained Age Method

A conversion method where the premium for a new whole life policy is based on the insured's age at the time of the conversion.

Original Age Method

A conversion method where the premium for a new whole life policy is based on the insured's age when the original term policy was taken out.

Whole Life Insurance

Permanent life insurance offering lifelong protection with a fixed death benefit, fixed premiums, and a cash savings value.

Maturity/Endowment

The point at which the cash value accumulations of a whole life policy equal the face amount, traditionally occurring at age $100$.

Mortality Cost

The portion of a whole life insurance premium used specifically to pay for the death benefit, also known as the term insurance cost.

Living Benefit

The policy's cash value, representing the amount a policyowner receives if the policy is surrendered or borrowed against while still in force.

Bundled Premiums

A characteristic of whole life insurance where the insurer is not required to explain how the premium is distributed between death protection, commissions, and expenses.

Limited-pay Whole Life Insurance

A policy where premiums are paid for a predetermined period, such as $20$ years or until age $65$, after which the policy is paid-up for life.

Modified Endowment Contract (MEC)

An IRS designation for life insurance policies, like single premium plans, where policy loans are treated as taxable distributions.