Unit 4 Life and Health

Level Term

Death benefit and premium both stay level

Decreasing Term

Death benefit decreases while premium stays level

Increasing Term

Death benefit and premium both increase

Return of Premium Term

Higher premium than regular term; premium is refunded if insured survives the term

Renewable (term feature)

No new application required; new premium based on attained age

Convertible (term feature)

Can be changed to permanent insurance without a new application

Traditional Whole Life

Fixed premium, fixed & level death benefit, with guaranteed cash values that endow at age 100

Cash Value

Part of a whole life policy with guaranteed interest; can be surrendered or borrowed

Death Benefit (Whole Life)

Amount at risk to the company plus cash values

Continuous Premium

A whole life type with premiums paid for the life of the policy

Limited Payment

A whole life type with premiums paid over a limited period

Single Premium

A whole life type paid in one lump sum with immediate cash values

Modified Premium

Lower premium for the first three to five years, then it jumps once and levels off

Graded Premium

Lower initial premium than whole life; increases for five to ten years then levels off

Indeterminate Premium

Premiums adjusted by the company, with a guaranteed maximum premium

Interest Sensitive Whole Life

Has a current interest rate and a guaranteed minimum interest rate

Adjustable Life

Policyowner can adjust the death benefit (increase requires proof of insurability) and the premium

Universal Life

Flexible premium policy with a cash account; cost of insurance and fees withdrawn monthly; earns current or guaranteed interest

Universal Life Option A

Level death benefit (insurance amount only)

Universal Life Option B

Increasing death benefit (insurance amount plus cash account)

Equity Indexed Universal Life

Cash account interest tied to a stock market index (up or down), but still guaranteed by the company

Variable Life Insurance

Life insurance plus investments in a separate account; requires life and securities licenses; owner can lose money

Variable Life

Death benefit can increase; has a guaranteed minimum death benefit

Variable Universal Life

No guaranteed death benefit

Joint Life (First to Die)

Pays benefit upon the first insured's death

Survivorship Life (Second to Die)

Pays benefit upon the second insured's death

Jumping Juvenile

A juvenile policy that automatically increases coverage at age 18 or 21