LI Quiz - Term

Policyholder aka “insured” is responsible for making all decisions regarding the policy.


Renewable feature: allows policyholder to renew the policy for another term w/o EOI


  • most insurers will NOT allow the policyholder to renew the policy beyond a certain age like age 80

  • only till 65-70 usually


convertible feature: allows policyholder to convert the term policy to a perm one while the convertible term policy is in force. the conversion does NOT require EOI


re-entry term: lower premium during first term. this is b/c the insured has retained part of the risk. upon renewal they will have to provide EOI, and IF their health has deteriorated, results in a higher premium vs. a healthy policyholder.


Material: means a detail is really important, and knowing the correct info would likely have impacted if (approved/deny) or how (premium amount, exclusions, etc.) the insurer would have issued the policy

ex. previous health concern like cancer


Advantages

  • allows the individual to insure temporary need for cheap premium in early years

  • easy for client to understand

  • premiums will NEVER increase during term (increases upon renewal though)

  • coverage can be customized by adding provisions such as renewability and convertibility

Disadvantages

  • death of the life-insured is generally the only way for the beneficiary/policyholder to receive and benefit from the policy

  • when term expires, the policy is finished (unless renewed). IF the life insured survives the term, the insurer receives NOTHING in return for the premiums paid other than peace of mind that arises from knowing that protection was in place

  • no cash value

  • even if the policy is renewable, only renewable until certain age, like age 80


combined insurance: a marketing initiative wherein 2 separate policies are solder under the same contract. purchasing 2 policies on each of their lives would be more expensive b/c of 2 potential DBs.

Advantage: only one administration fee is charged (usually applies to each contract)


term insurance is “pure insurance”


ALL convertible features allow the insured to convert w/o EOI


OG Age Conversion

Advantage: premium is based on the person’s OG age when they originally bought the convertible term policy

Dis: insured would have to pay a lump to bring the cv tof the perm plan up to the ammount accumulated if a perm plan had been brought right @ the beginning


Attained-Age Conversion

Ad: insured would NOT have to pay a lump sum to bring the cv of the perm plan up to the amount that would have accumulated if a perm plan had been bought right @ the beginning

Dis: premiums is based on attained age upon conversion, higher premiums than OG age


Joint first-to-die

Some plans will allow the surviving spouse the option to continue the same amount of coverage on their own life under a new policy w/o having to provide EOI.


Note:

This option usually needs to be exercised within a certain time period after the first death (ex. 30 days)

IF the policy doesn’t allow for this option, the DB will be paid, and the policy is finished.