Ownership & Interest
A situation where the owner of a life insurance policy is someone other than the insured.
Third-party Ownership
Pays off the mortgage debt if the insured dies and assures that their surviving family will be able to stay in their home.
Mortgage Life Insurance Policy
States that the purpose of life insurance is to replace an individual's economic value. It is the amount of the individual's annual income multiplied by the number of years until retirement.
Human Life Value
Provide for the sale of a business interest at the death or disability of an owner. They are often referred to as business continuation plans.
Buy-sell Agreements
Which premium is the mortality element minus the interest element?
Net Premium
When a life insurance policy's applicant and insured are the same.
Two-party Contract
What do permanent life insurance policies that have a cash value component that grows over time do?
Accumulate Cash
Used to find the amount of insurance coverage an individual should buy. Looks at the financial situation the survivors will face if the individual dies.
The Needs Approach
An employer agrees to pay an employee a stated amount of income beginning at retirement rather than paying the money now. The money is not taxable until the employee actually receives it.
Deferred Compensation Plan
The face amounts are small, $2,000 or less. The premiums come due weekly and are collected in person by producers who go door to door.
Industrial Life Insurance
The person applying for the policy must be at risk of suffering a significant loss if the insured dies.
Insurable Interest
Refers to how easily an asset can be turned into cash without loss of value.
Liquidity
These are needs that can be met with a lump of money. This includes final expenses, debt payoff, children's education, or emergency fund.
Cash needs
Executive Bonus Plan
The net premium plus the expense element, referred to as the loaded premium. This is the amount a policyowner pays for a policy.
Gross Premium
With life insurance, insurable interest is only required when?
At the time of application
An individual's assets they leave behind at death
Estate
Needs created by ongoing living expenses such as food, clothing, utilities, and a mortgage. Have 3 distinct periods: Family dependency, preretirement, and retirement.
Income Needs
A business may depend on a particular employee whose contribution is key to its success. Businesses can protect themselves against the financial harm that would result from the death of such an employee.
Key Person Coverage
Policies sold by producers in the neighborhoods where they collect industrial life premiums. These policies are larger in size, ranging from $10,000 to $25,000.
Home Service Life Insurance
Does insurable interest exist between lenders(creditors) and the people that owe them money (debtors)?
Yes
Precious metals, real estate, farms, and precious gems are examples of what?
Illiquid Assets
The Social Security Administration provides benefits for surviving spouses with children under 16. When the youngest turns 16, benefits stop and do not resume until the surviving spouse turns 60.
Blackout Period
A single contract that covers an entire group of people, often provided as part of a complete employee benefit package.
Group Life Insurance
Reflects how frequently premiums come due. Can be annually, semi-annually, quarterly, or monthly.
Premium Payment Mode