Chapter 2

Attained age

the insured's age at the time the policy is issued or renewed

Cash value

a policy's savings element or living benefit

Face amount

the amount of benefit stated in the life insurance policy

Deferred

withheld or postponed until a specified time or event in the future

Endow

the cash value of a whole life policy has reached the contractual face amount

level Premium

the premium that does not change throughout the life of a policy

Liquidation Of an estate

converting a person's net worth into a cash flow

Nonforfeiture values

benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

Policy maturity

in life policies, the time when the face value is paid out

Securities

financial instruments that may trade for value (for example, stocks, bonds, options)

What type of insurance provides the most coverage for the lowest cost but has no cash value?

Term Insurance – high coverage, low premium, no cash value.

What does “level” mean in level term life insurance?

The death benefit stays the same throughout the policy term.

What does whole life insurance provide?

Lifetime protection and cash value.

What happens if you miss a payment on a universal life policy?

Money is taken from the cash value to keep it active

Who takes the investment risk in a variable contract?

The policyowner

How are premiums set for a joint life policy?

By averaging the ages of both people.

When does a joint life policy pay out?

When the first person dies.

When does a survivorship life policy pay out?

When the second person dies.

Why does the annuitant have to be a real person?

Because the annuity depends on their life length.

What happens during the accumulation and annuity periods?

A: Money goes IN during accumulation and comes OUT during the annuity period.

How does life expectancy affect benefits?

Shorter life expectancy = higher benefit; longer life expectancy = lower benefit

What’s the difference between immediate and deferred annuities?

Immediate starts income right away; deferred starts after 1 year or more.

What does the fixed-period option do?

Pays for a set time, even if the annuitant dies.

What are the 3 basic types of term life insurance?

Level, Increasing, and Decreasing

Who is an annuitant?

The person on whose life expectancy the annuity is written and who recieves benefits from the annuity