Different Types of Life Policy
Is the CHEAPEST type of pure life insurance, and due to having a termination date and not having any cash value
TERM LIFE
Life insurance which is written on the lives of a minor
Juvenile Insurance
creates or increases Chance of Loss.
hazard
Transfer
Dividends from a Mutual Insurance Company are paid to whom?
Policyholders
Has a level face amount and level premiums. premium tend to be higher than annual renewable term because they are level throughout the policy period. and Premium increases at each renewal.
LEVEL TERM
Pays a death benefit when ONE insured dies. Single premium is charged.
Joint Life Policy
Potential for loss
Risk
Group owned insurance company that is formed to assume and spread the liability risks of its members is knows as a
Risk Retention group
Agent who represents only ONE insurance company
Captive
Provides an annually decreasing face amount over time with level premiums. usually used for mortgage protection.
DECREASING TERM
Subject to minimum interest guarantee. Any surrender charges must be disclosed. It has flexible premiums, flexible benefits, no minimum death benefit, and cash value withdrawals. Allows it's policy owners to determine the amount and frequency of premium payments.
Speculative Risk
Avoid the risk all together.
What is the accounting measurement of an insurance company's future obligations to it's policyowners?
Reserves
Provides both living and death benefits for the entire life of the insured. Matures at the age 100 and normally has a level premium.
WHOLE LIFE
Policy that is over funded according to lousy IRS. It has the 7 pay test limitation. 10% penalty charge withdrawn prior to age 59 1/2. Penalty taxes on premature distributions from a MEC normally apply to policy loans.
Modified Endowment Contract
Only Insurable risk. Potential for Loss Only.
Pure Risk
Take precautions. Minimizing severity of a potential loss
Risk Reduction.
Stock insurance company is owned by its
Shareholders
Allows the insured to pay the premium in One Lump Sum and have coverage for the insured's entire life.
SINGLE PREMIUM WHOLE LIFE
Builds cash value. combines all characteristics of Universal Life and Variable Life. . Cash value can be invested in separate accounts. Invested in stocks/bond markets. Evidence of insurability can be required for an individual when the death benefit is INCREASED.
Prediction of individual and group losses based on past experiences. An increased degree of accuracy in predicting losses.
Law of Large Numbers.
Involves making an insured whole by restoring them to the same condition as before a loss
Principle of Indemnity
Dividends from a stock insurance company are normally sent to
Shareholders