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Term Life Insuracne - A pure form of insurance bc only death benefit The most efficient method of getting life insurance Pure Provides only death benefit and no cash value Level Term Insurance Level death benefit but increasing premium It renews every year Decreasing Term Insurance Decreasing Death benefit but the premiums remain level -Often used in connection with a mortgage or large loan Return of Premium Policy A term policy that returns the premium at the end of the term. Term periods of 10-30 years. Premiums are higher to allow the insurance company to make interest Renewability Provision Allows policy owner to renew policy at end of renewal period without medical exam or providing evidence of insurability Convertability Can convert from term to whole without medical exam When Converting using the "atained" Method, the new policy is using the actuall age Using Original Age, you can covert as if you had whole life since the beginning of the policy but you'd have to fund the cash portion with a lump sum Whole Life Contracts - predetermined policy term plus cash Permanent till 100 level death benefit level premium builds cash value property - policy can be sold or transferred Gets a fixed interest rate on the cash Limited Pay Whole Life Same as whole but there's a finite period to fund Modified Whole Life same as whole but with 1 ratchet up of premiums Graded Whole Life premiums are less in early part of contract but ratchets up for 5 years at which time it reaches a level premium Enhanced Ordinary Whole Life issued by mutual co and death benefit declines but the dividend offsets the reduction in the death benefit Indeterminate Premium Whole Life Written by non qualified stock companies, and the premiums are indeterminate bc the future premiums are based on the insurers investment performance Current Assumption Whole Life Utilizes current insterest rates and is like an indeterminate premium whole Life Index Policy The whole life policy has increasing death benefit due to its indexing to inflation. If the policy holder assumes the risk, his premiums will rise. If the insuarnce co assumes the risk, the premiums are higher in the beginning to offset the expected increasing death benefit Equity Indexed Life Insurance Universal life policy whereby the cash portion is tied to an index. Upside appreciation is capped and downside is capped at 0 or some other interest rate. The insurance co would get the benefit the index surpasses the cap. Endowments I finite whole life policy that pays at the end of the policy, not death Adjustable Life A whole life policy where the death benefit can be adjusted, therefore the premium is adjusted Universal Life Offers more flexibility that adjustable or tradition whole life - can alter the death benefit up or down therefore the premium is adjusted - The owner can overfund the cash portion in the early years to help pay premium in later years - its unbundled so the policy owner can see where his money is going - it has a guarenteed interest rate or may use current rates, whichever is higher Death benefit is not guarenteed bc of the owner's ability to alter payment Target Premium The premium the insured would like to pay for a universal life Variable Life Like whole, but the cash portion is variable and carries other risk. Premiums are fixed but cash value adjusts - There is a guarenteed death benefit Family Income Policy A combo of whole life with a decreasing term rider to allow for income. - if you die within the term period, you get income and then at the end you get the death benefit -Designed to protect family if breadwinner dies Family Maintenance Policy Whole life + level term rider. You'd get income for the entire period of the term policy. Family Policy Provides an entire family with insurance. The breadwinner has a whole life policy and the spouse and kids have level term insurance. The spouse's death benefit is 1/2 the breadwinners and the kids are 25% of breadwinners death benefit Joint Life Policy (First to die Policy) Will cover 2 or more people. If the 1st insured dies, the death benefit goes to the other and the contract ends Survivorship Life Policy also called 2nd or last to die The benefit is paid when the 2nd is dead. Used for estate planning Juvenile Life Insurance A child is insured but when the child reaches 18 - 21, the death benefit jumps 5x Credit Life Insurance Protects bank lender should borrower die - it has a declining death benefit