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Key aspects of Group Insurance (2)
  • 10 or more people under one master contract
  • Has a plan sponsor (Owns policy, Pays premiums, administers plan)
Three types of Individual/Ordinary Insurance (3)
  • Term
  • Life (Permanent)
  • Endowment
Key aspects of Credit Life insurance
  • Covers debtors for the benefit of Creditors
Key aspects of Industrial life (Debit, Home service) insurance (2)
  • Written for small amounts
  • Frequent premium payments
Key aspects of Renewable Term (3)
  • May be renewed at the end of term without evidence of insurability
  • May be limited to number of renewals or age
  • Premium based on insured's age at time of renewal
Non-renewable term (1)
  • Issued for a specific time and is not renewable
Key aspects of convertible term (3)
  • Convert or exchange term for some form of permanent insurance without evidence of insurability
  • Conversion must be made prior to expiration of term policy
  • Premium based on attained age
Reentry term
  • Gives the insured the opportunity to provide evidence of insurability at the end of the term to qualify for reduced premium rates
Three types of term policies 
  • Level
  • Increasing
  • Decreasing
Level term policies
  • Fixed face value
  • Premiums may increase or stay the same
Increasing term policy
  • Starts low (sometimes at zero) and face value increases over time
Decreasing term
  • Coverage starts at face value and reaches zero at the end of the term
  • Ideal for protecting against liability (like a mortgage)
Key aspects of whole life insurance (5)
  • Endow at age 100
  • Matures at death or age 100
  • Level premiums for life of policy
  • Level face amount
  • Guaranteed cash amount (savings element that begins to grow after 3 years)
Three types of whole life policies
  • Continuous premium whole life (Straight life)
  • Single premium whole life
  • Limited pay whole life
Indeterminate premium whole life
  • Dual premiums
  • Maximum premium and discount premium (based on insurance companies investment performance)
Current assumption (interest sensitive) whole life 
  • Interest/business performance sensitive
  • Premium adjustments usually made on a yearly basis
Modified whole life
  • Lower premiums the first 3-5 years
  • Structured as a term policy early on, then premium becomes higher than whole life
Graded premium whole life
  • Premiums increase each year for the first few years (usually 5) and then stays the same
Equity indexed whole life
  • Face amount liked to an equity index (ex. S&P 500)
  • Additional premium charged when company increases coverage or increase it due to assumptions of inflation
Joint life
  • Whole life policy
  • Two or more insureds
  • Amount payable on first death of insured(s)
  • Can be sold as term life
Survivorship Life
  • Whole life payed on the death of the last surviving insured (all insured have died)
Juvenile Life Insurance (Jumping Juvenile)
  • Premium remains level but face value increases (usually at 21)
Payor Benefit
  • Added as a rider on an adults life insurance policy
  • Premiums are waived for minor until certain age is reached (usually 21)
Family Policy
  • Five times coverage on "bread winner"
  • Two times coverage on spouse
  • One time coverage on each child (Ex. 100k on Dad, 25k on mom, 20k on each child)
Adjustable life
  • Either term or whole life
  • Policy owner can adjust face amount, premiums or plan type
  • Insured picks two, insurance company picks one
Universal Life
  • Premium payments separated: insurance protection and cash value
  • Policy owner may decrease or increase death benefit during policy term (subject to insurability requirements)
  • Premium amounts may be changed as long as the policy can be financially maintained
  • Interest earned by cash will vary.  Guaranteed minimum.
Variable life
  • Guaranteed minimum death benefit (may increase dependent upon investment performance)
  • Cash values are not guaranteed (Will change with investment performance)
  • They are considered securities
Variable Universal Life
  • Elements of variable life backed by equity investments
  • Elements of universal life by adjusting death benefit and/or premium
Industrial Life
  • Relativly small amounts of coverage
  • Frequent premium payments (weekly or monthly)
  • Personal collection of premiums by agent or company rep
  • Coverage may be available for family members (from birth to age 70)
  • No medical exam required
  • Grace period of 28 days (if payed weekly) 31 days if paid monthly
Home service life insurance
  • Variant of industrial life
  • $10,000-$15,000 face value
  • Sold on automatic monthly debit plan
Credit life insurance
  • Written on debtors for benifit of creditors
  • If debtor dies, balance of debt is paid off (policy face value can not exceed amount owed)
  • Credit life is a temporary assignment
  • Creditor is owner and benificiary
  • Debtor pays the premiums
  • Often written as decreasing term insurance
  • Insured are given a certificate of coverage
  • Coverage cancelled if debt is paid off, transferred refinanced of becomes significantly overdue
Entire Contract Provision
  • The policy and the application constitute the entire contract
  • All statements made by insured are representations not warranties
  • Provide assurance to insured that they posesses all necessary Life insurance documentation
  • Prevents the company from unilaterally changing policy
  • Modifications must be attached to the policy (only can be made by an executive officer)
Insuring Clause
  • Insurer agrees to provide insurance and includes details and requirements of contract for both insurer and insured
Free Look Clause
  • 10-20 day period
  • Begins when the policy owner receives the policy
  • Refund only occurs if policy is returned within the 10 or 20 day period
Consideration Clause
  • Initial premium is required to put the policy in effect
  • Insured's consideration is the premium being paid
  • Insurers consideration is the promise to pay the face amount
Policy owner's rights
  • Changing beneficiaries
  • Receiving dividends if any are paid
  • Borrowing funds from cash value if they exist
  • Assignment of some or all of the rights of the contract to another party
Third Party Ownership
  • Policy is owned by someone other than the insured
  • Examples: Group life, Key employee, viatical settlement, partners in buy-sell agreements, juvenile
Eligible Benificiaries
All of the following can be beneficiaries of a life insurance policy
  • Individuals
  • Businesses
  • Trusts
  • Estates
  • Charities
  • Minors

Primary Beneficiary
  • Designated by the applicant to receive the face amount of the policy
Contingent beneficiary
  • The person who recieves the face value of the policy if the primary
Common Disaster Clause
  • In the event of a common disaster it will be assumed that the insured outlived the primary beneficiary
  • Death of primary beneficiary must occur within 30 to 90 days of the disaster
Uniform Simultaneous Death Act
  • If insured and beneficiary die in the same accident, and there is no evidence to the contrary, it will be treated as if the insured outlived the beneficiary
Spendthrift Clause
  • Protects the cash value from being spent extravagantly by the beneficiary
  • Proceeds paid in some way other than a lump sum
  • Payments paid to the beneficiary are protected from creditors while in possession of the insurance company
  • Beneficiary cannot transfer, commute or encumber the funds
Distribution by Descent
  • Per Stirpes - to the descendants of the named beneficiary in equal shares
  • Per Capita - To named, living, beneficiaries
Revocable and Irrevocable beneficiaries
  • Revocable beneficiary - May be changed by the policy owner
  • Irrevocable beneficiary - Designation can not be changed without the consent of the beneficiary

Change of Beneficiary
  • A change of beneficiary form must be filled out
  • If a beneficiary is irrevocable, permission must first be given by the irrevocable beneficiary
Interest on Proceeds
  • If a claim is not paid within 30 days of receiving proof of loss, interest must be paid on the death benefit
Payment of Premiums
  • Annual payments are the least expensive, monthly are the most expensive
  • Life insurance premiums are based on mortality, interest and expenses
Grace Period
  • The period of time where the premium is past due but the policy is still in effect
  • Protects the policy owner from an unintentional lapse
  • The face value will be payed in the event that the insured dies during the grace period
  • Outstanding premium will be deducted if face value is paid out during this time
  • Generally the grace period is 31 days
Automatic Premium Loan
  • May be added to a cash value life insurance policy
  • Used to protect against accidental lapses in the contract
  • Must be requested at the time of application
  • Will lapse when cash value reaches zero (becomes impossible to reinstate policy)
  • Outstanding loan amounts will be deducted from the death benefit upon the death of the insured
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