Life Insurance Policy Types Practice Flashcards

Comprehensive vocabulary flashcards covering general concepts, temporary, permanent, and nontraditional life insurance products as detailed in the Ohio Life and Health Pre-licensing course materials.

Accidental Death Benefit (ADB)

A type of policy that provides benefits in the event of accidental death; the accidental loss of sight, speech, or hearing; loss of use of limbs (i.e., paralysis); or loss of a member(s), such as the loss of an arm or a leg.

Adjustable Life Insurance

A permanent life policy offering the policyowner flexibility in premium payment amounts and an adjustable death benefit, where the cash value grows at a guaranteed fixed rate.

Attained Age

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

Cash Surrender Value

The amount available in cash upon the surrender of a policy by the owner before or after the policy matures.

Convertible Term Life Insurance

Temporary life insurance allowing the policy owner to convert the term policy for a permanent whole life policy without evidence of insurability.

Decreasing Term Insurance

A type of temporary protection characterized by a reducing face amount each year, often used in conjunction with a debt or loan.

Endowment Contract

A contract that pays a face amount after a fixed period (e.g., $10$, $20$ years, or at age $65$), or upon the insured's death if it occurs before the end of the period.

Extended Term Insurance

A nonforfeiture option available when a policy is surrendered, continuing the same face amount of the policy in force for a specified period.

Family Income Policy

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

Joint Life Insurance

A policy that covers the lives of two or more persons, paying a death benefit and ending when the first insured dies.

Universal Life Insurance

A flexible life insurance policy with flexible premiums and adjustable death benefits, essentially a term policy with cash value (savings).

Mortgage Redemption Insurance

A type of decreasing term life insurance policy designed to cover a mortgage.

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 the loan is repaid.

Level Term Life Insurance

Provides a level amount of protection for a specified period, after which the policy expires.

Step-up Premium

A steady increase in the premium over time.

Annually Renewable Term (ART)

Also known as yearly renewable term (YRT), it provides coverage for one year and allows renewal each year without evidence of insurability.

Increasing Term Life Insurance

Provides a death benefit that increases at periodic intervals over the policy's term.

Interim Term Life Insurance

A type of convertible term insurance for individuals wanting immediate protection but unable to afford permanent protection immediately; the temporary premium is based on the original application age.

Whole Life Insurance

Permanent insurance providing a level death benefit and level premium, designed to mature when the cash value equals the face value at age $100$.

Ordinary Whole Life

Also known as straight life or continuous premium life, where premiums are payable as long as the insured is alive.

Limited Payment Whole Life

A whole life policy where the policyowner pays a predetermined premium for a limited payment period.

Single-Premium Whole Life

The most expensive whole life policy initially, creating an immediate nonforfeiture value (cash value).

Modified Whole Life Insurance

A policy with an initial premium lower than straight whole life for an introductory period (e.g., $5$ years), which then jumps to a higher fixed rate.

Graded Premium Whole Life

A plan with a lower premium than straight whole life in the early years that increases annually for an initial period and then remains fixed.

Enhanced Whole Life

Also referred to as economatic life or extraordinary life, this is a low-premium, participating, permanent life insurance policy.

Equity-Indexed Whole Life

A contract where the policyholder can share in a percentage of the growth of an indexed investment, such as a mutual fund tied to the S&P $500$.

Target Premium

A suggested premium used in universal life policies.

Universal Life Death Benefit Option A

The death benefit equals the cash values plus the remaining pure insurance (decreasing term plus increasing cash values).

Universal Life Death Benefit Option B

The death benefit equals the face amount (pure insurance) plus the cash values (level term plus increasing cash values).

Indexed Universal Life Insurance

Combines features of traditional life insurance with potential earned interest based on the upward movement of an equity index.

Variable Life Insurance

Permanent insurance with a guaranteed minimum death benefit where the cash value is deposited in a separate account and invested in securities.

Variable Universal Life

A hybrid of universal life and variable whole life that combines an investment feature with flexible premiums.

Family Plan Policy

A policy designed to cover all family members under one single policy.

Family Maintenance Policy

Consists of both whole life and level term insurance, providing income for a specific period beginning on the date of death of the insured.

Second-to-Die (Survivor) Policy

Covers two or more people and pays a benefit upon the death of the last covered person.

Juvenile Life Insurance Policy

Any type of ordinary life insurance policy that insures the life of a minor.

Modified Endowment Contract (MEC)

A policy that is considered overfunded by IRS tables and fails the "seven-pay test."

Industrial Life Insurance

Characterized by small issue amounts, such as $"1,000"$, with premiums collected on a weekly or monthly basis.

Monthly Debit Ordinary Life Insurance

A combination of industrial life insurance and ordinary life insurance.

Face Amount Plus Cash Value Policy

A contract that promises to pay the policy's face amount plus its accumulated cash value upon the death of the insured.

Stranger-Owned Life Insurance (STOLI)

A situation where a person purchases life insurance only to sell it to a third party with no insurable interest.

Nonmedical Life Insurance

Life insurance that typically doesn't require a medical exam and tends to be more expensive than underwritten policies.

Participating Life Insurance Policy

A policy that provides dividend payments to the policyowner from the life insurance company.

Nonparticipating Policy

A policy that does not have the right to share in excess earnings and does not receive dividend payments.