Chapter Three

Temporary protection for a specified period of timeWill expire at an attained age or after specified period of timeNo cash or loan valueFace Amount is only paid if the insured dies during the specified term of the policyPremium increases at renewal or conversion, advancement in insured age, and policy becomes more expensiveCan be written separately or with other types of insurance Rates are higher for a 10-year than for a 5-year

LevelDecreasing IncreasingRe-EntryLife-ExpectancySimplified Issue

The death benefit and premiums remain level during the policy termMost group life insurance is written this way

The death benefit decreases, but premiums usually remain level Often utilized as "Mortgage Redemption" or "Credit Life Insurance"

The death benefit increases over the life of the policy and the premiums remain level.Normally written as a rider for the return of premium on a permanent policy over a set number of years.

Characterized by lower premiums at issueThe insured is able to renew the policy at the lower premium classification as long as he/she can provide evidence of insurability

Provides a level term benefit over the life expectancy of the insured using a specific mortality table. The contract is pure protection, but with the level premium concept, a cash value accumulates to help offset the required premiums in the later years.

a life insurance policy that undergoes a simplified underwriting process that does not require a medical exam to issue. Typically they offer face amounts of $250,000 or less in coverage.

The right to renew on renewal date without evidence of insurability. The renewal premium is based upon attained age. Decreasing term is never renewable

The right to convert to a permanent policy without evidence of insurability. The premium is based upon attained age or issue age.

Whole life is permanent protection that matures at insured’s age 100. It pays the face amount to owner if insured lives to age 100. Premiums are paid to age 100 or to time of premature death, whichever occurs first. Insurers assume insured will not live to 100.The policy builds cash, loan, and nonforfeiture values. Pure insurance protection is the face value minus the cash value. (As the cash value increases, the pure protection decreases, but the face amount would remain the same.)The policyowner may borrow from the cash value. Policy loans may carry a fixed or variable loan interest rate. If the policy lapses from nonpayment of premium, nonforfeiture values are available for use by the policyowner. Each policy contains a nonforfeiture table showing the value of these benefits. The policy has a level premium and face amount. Premiums will be more than the cost of the policy in early years and less than the cost in the later years.The shorter the premium paying period, the higher the premium (a Limited Pay Life of 20 years would have a higher premium than a Straight Whole Life). Settlement options are available upon the death of the insured or upon the policy’s maturity.The cash value equals the face value upon maturity; age 100. You may add a term rider to this policy, but you cannot convert a whole life policy to a term policy

Ordinary (Straight) Life- Whole LifeLimited PaymentSingle Premium Indeterminate PremiumCurrent Assumption (Interest Sensitive) Whole LifeEnhanced Ordinary Life (Economatic)

Both the premium and the face amount (death benefit) remain level to age 100 or death of the insured, whichever comes first.Lowest premium but require the largest overall premium over the life of the plan

Premium payments are for a specified time, such as 20-pay, 30-pay or to age 65. However, the face amount (death benefit) remains level to age 100. The shorter the premium payment period, the larger the premium amount.

The entire cost of the policy is paid at the time of purchase. The face amount (death benefit) remains level to age 100. The cash value builds more quickly than in Straight Life or Limited Life