Life Insurance Policy Types

Temporary death-benefit protection, generally without cash value.

Term life insurance

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

Coverage ends

Death benefit stays constant during the specified term.

Level term

Death benefit declines over the policy term.

Decreasing term

What need often fits decreasing term coverage?

Declining mortgage

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

Annually renewable term (ART)

Renewal without new evidence of insurability.

Renewable term provision

Conversion to permanent life insurance without new underwriting.

Convertible term provision

At what age are converted-term premiums usually calculated?

Attained age

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

Return-of-premium term insurance

Permanent life insurance with guaranteed cash-value features.

Whole life insurance

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

Ordinary (straight) whole life

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

Limited-pay whole life

Does coverage end when limited-pay premiums finish?

No

Permanent insurance funded by one upfront premium.

Single-premium whole life

How does whole-life cash value generally grow?

Contract guarantees

Does traditional whole life generally have a level death benefit?

Yes

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

Universal life (UL)

What is a key danger of underfunding universal life?

Policy lapse

Which universal-life death benefit option is usually level, subject to corridor rules?

Option A

Which universal-life death benefit option usually equals face amount plus account value?

Option B

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

Adjustable life insurance

Whole life whose nonguaranteed values respond to interest rates.

Interest-sensitive whole life

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

Variable whole life

Who usually bears investment risk in variable life?

The policyowner

Flexible-premium UL with investment-linked separate accounts.

Variable universal life (VUL)

What distinguishes indexed universal life from directly invested variable life?

Indexed crediting

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

No

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

First-to-die joint life insurance

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

Second-to-die survivorship life insurance

What planning need often uses second-to-die survivorship life insurance?

Estate planning

Permanent base coverage combined with term coverage for family members.

Family protection policy

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

Family income policy

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

Family maintenance policy

Juvenile policy whose face amount increases at a stated age.

Jumping juvenile policy

Life coverage intended to repay an outstanding debt on death.

Credit life insurance

Who typically receives proceeds of credit life insurance?

Creditor

Business-owned life insurance covering an essential employee.

Key-person life policy

Who is typically the beneficiary of key-person insurance?

Business

Agreement funded by insurance to buy a deceased business owner’s interest.

Buy-sell agreement

Coverage issued under a master policy for eligible members.

Employer-owned group life insurance

Who gets the master policy in employer group life insurance?

Employer

What does the covered employee usually receive?

Certificate of insurance

Employees contribute toward premiums.

Contributory group plan

The group policyholder pays the premiums.

Noncontributory group plan

What does group underwriting usually emphasize?

Group characteristics