9/25/21, 8:41 AMThe Exam Simulator for the Web!1/18Types Of Life PoliciesThis chapter teaches you about the major types of life insurancepolicies, their characteristics and functions, and who is bestserved by each type. This chapter also includes a discussionabout annuities. It teaches you about the parties to the annuity,and annuity periods, and how to recognize different classifications of annuities.TERMSTOKNOWAttained age– the insured's age at the time the policy is issued or renewedCash value– a policy's savings element or living benefitFace amount– the amount of benefit stated in the life insurance policyFixed life insurance– contracts that offer guaranteed minimum or fixed benefitsDeferred– withheld or postponed until a specified time or event in the futureEndow– the cash value of a whole life policy has reached the contractual face amountLevel premium– the premium that does not change throughout the life of a policyLiquidation of an estate– converting a person's net worth into a cash flowNonforfeiture values– benefits in a life insurance policy that the policyowner cannot lose even ifthe policy is surrendered or lapsesPolicy maturity– in life policies, the time when the face value is paid outQualified plan– a retirement plan that meets IRS guidelines for receiving favorable tax treatmentSecurities– financial instruments that may trade for value (for example, stocks, bonds, options)Suitability– a requirement to determine if an insurance product is appropriate for a customerVariablelife insurance– contracts in which the cash values accumulate based upon a specificportfolio of stocks without guarantees of performanceThere are many types of life insurance products available for consumers.Although all life insurance products offer death protection, each type alsoincludes its own unique features and benefits and is designed to serve differentinsureds’ needs.Regarding the length of coverage, all life insurance policies fall into 2 categories:temporary and permanent protection.A. Term LifeTerm insuranceistemporaryprotection because it only provides coverage for aspecific period of time. It is also known as pure life insurance. Term policiesprovide for the greatest amount of coverage for the lowest premium as comparedto any other form of protection. There is usually a maximum age above whichcoverage will not be offered or at which coverage cannot be renewed.Term insurance provides what is known aspure death protection:Powered by ExamFX - Online Training & Assessment
9/25/21, 8:41 AMThe Exam Simulator for the Web!2/18If the insured dies during this term, the policy pays the death benefit to thebeneficiary;If the policy is canceled or expires prior to the insured's death, nothing is payableat the end of the term; andThere is no cash value or other living benefits.
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