Attained age
— the insured's age at the time the policy is issued or renewed
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| Term | Definition |
|---|---|
| Attained age | — the insured's age at the time the policy is issued or renewed |
| Cash value | — a policy's savings element or living benefit |
| Face amount | — the amount of benefit stated in the life insurance policy |
| Deferred | — withheld or postponed until a specified time or event in the future |
| Endow | — the cash value of a whole life policy has reached the contractual face amount |
| Level premium | — the premium that does not change throughout the life of a policy |
| Liquidation of an estate | — converting a person's net worth into a cash flow |
| Nonforfeiture values | — benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses |
| Policy maturity | — in life policies, the time when the face value is paid out |
| Securities | — financial instruments that may trade for value (for example, stocks, bonds, options) |
| What are the two classifications of annuities according to the time when annuity payments begin? | Immediate and deferred |
| General characteristics | **Pure protection **Lasts for specific term **No cash value |
| Level Premium Term | Level death benefit and level premium |
| Annually Renewable Term | **Renews each year without proof of insurability **Premiums increase due to attained age |
| Decreasing Term | Coverage gradually decreases at predetermined times; best used when the need for protection declines from year to year |
| Features of Term Policies | **Renewable - renew the policy without evidence of insurability **Convertible - right to convert a term policy to a permanent policy without evidence of insurability |
| General characteristics | **Permanent protection **Guaranteed elements (face amount, premium, and cash value) until death or age 100 **Level premium **Cash value and other living benefits |
| Ordinary Whole Life (Continuous Premium) | **Basic policy **Level death benefit **Insured pays premiums for life or until age 100 |
| Limited Payment | Premiums paid until a certain time; coverage in effect to age 100 |
| Single Premium | Premiums paid in one lump sum; coverage continues to age 100 |
| General characteristics | **Types of whole life insurance **Flexible premium |
| Universal Life | **An insurance component in the form of annually renewable term **2 death benefit options: Option A - level death benefit, and Option B - increasing death benefit **Can make partial surrender/cash withdrawal |
| Variable Life | **Fixed premium, minimum death benefit **Cash value and the actual amount of death benefit are not guaranteed **Assets in separate accounts **Agents must be dually licensed in insurance and in securities Combination Plans Joint Life: |
| Combination Plans | Joint Life: - Premium is based on the joint average age of the insured - Death benefit upon the first death only Survivorship Life: - Premium is based on the joint average age of the insured - Death benefit upon the last death |
| Phases | **Accumulation (pay-in) - payments made into the annuity **Annuitization (pay-out) - payments made to the annuitant from the annuity |
| Parties | **Annuitant - insured (must be a natural person); annuity issued on annuitant's life **Beneficiary - will receive any amount contributed to annuity (plus any gain) if annuitant dies during accumulation period **Owner - has all rights to policy (usually annuitant); can be corporation or trust |
| Types of Annuities | **Fixed annuities - guaranteed, fixed payment amount; premiums in general account **Variable annuities - payment not guaranteed; premiums in separate account, and invested in stocks and bonds **Indexed annuities - interest rate tied to an index; earn higher rate than fixed annuities, not as risky as variable annuities or mutual funds |
| Premium Payments | **Single premium - ONE lump-sum payment; the principal is created immediately (both immediate and deferred annuities) **Periodic (Flexible) premium - multiple payments; the principal is created over time (used for deferred annuity only) |
| Income Payments | **Immediate - purchased with a single premium; income payments start within 12 months from the date of purchase **Deferred - purchased with either lump sum or periodic payments; benefits start sometime after 1 year from the date of purchase |
| Payout Options | **Lump Sum - received at annuitization **Life Only (Straight Life) - payments for the rest of annuitant's life; pays highest monthly amount **Refund Life Annuity - guaranteed lifetime income; upon annuitant's death, balance is "refunded" to beneficiary in cash or in installments **Joint Life - 2 or more annuitants receive payments until first death, then payments cease **Joint and Survivor - income for 2 or more that cannot be outlived; often used with period certain **Annuities Certain - payment guaranteed for fixed period or until certain fixed amount paid; no life contingencies |
| annuity | contract that provides income for a specified period of years, or for life. |
| Annuitant — | he person who receives benefits or payments from the annuity, whose life expectancy is taken into consideration, and for whom the annuity is written. |
| Joint life | single policy that is designed to insure two or more lives. Joint life policies can be in the form of term insurance or permanent insurance. |
| Joint life is based on? | joint average age and first death only. |
| major difference is that survivorship life pays on? | the last death |
| Adjustable life | developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage) |
| developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage) however? | changing to a lower premium type of policy will usually require proof of insurability |