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LIFE INSURANCE TERMS

TermDefinition
Term Life Provides pure protections for a set time frame with a lower initial premium. No cash value or equity.
Level Term Life Insurance Provides a level amount of protection for a specific period, after which the policy expires.
Increasing Term Life Insurance Provides a death benefit that increases at periodic intervals over the policy's term. Purchased as rider or condition on a policy. Preferred for inflation consideration.
Decreasing Term Life Insurance Provides a death benefit amount that decreases gradually over the term of protection. Preferred while paying off debts. (i.e. Mortgage Redemption Insurance)
Credit [Term] Life Insurance A limited benefit policy that's designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid.
Interim Term Life Insurance A type of convertible term insurance for a person that want immediate protection, but who's not able to afford permanent immediately. The premium for permanent protection is based on attained age.
Option to Renew [Term] Allows the policy owner to renew the term policy before its expiration date without being required to provide evidence of insurability.
Option to Convert [Term] Gives the insured the ability to convert or exchange the term policy for a whole-life policy without evidence of insurability.
Step-Up Premium Steady increase in premium.
Annually (Yearly) Renewable Term (ART/YRT) Provides coverage for one year and allows the policy owner to renew coverage each year, without evidence of insurability.
Whole Life Insurance Provides for the payment of a death benefit or face amount of coverage upon the death of the insured. Permanent insurance, fixed death benefit, fixed premium (annual payments are lower cost than monthly), tax-deferred cash value.
Straight (Whole / Continuous) Life Level premium for life.
Limited Payment Whole Life Predetermined premium for a limited payment period. Pays off policy faster.
Single Premium Whole Life One premium to pay off the policy creating an immediate non-forfeiture (cash value). Most expensive initially but cheaper over-all cost of the policy.
Modified Whole Life Initial premium that's lower than straight whole life for an introductory period (i.e. 5 years) before premium jumps to a rate higher than a straight life policy would have cost if taken out originally.
Graded Premium Whole Life Lower initial premium but increases annually for the initial period before jumping to an amount that's higher than the whole life premium and remains fixed for life.
Enhanced (Economic / Extraordinary )Whole Life Insurance Low premium based participating permanent insurance policy.
Indexed Whole Life Insurance Face amount increases in line with rises in the Consumer Price Index (CPI) without requiring evidence of insurability.
Equity Indexed Whole Life Insurance The policyholder can share in a percentage of the growth of an indexed investment (i.e. S&P). The minimum interest and death benefit are guaranteed but these products are not considered securities.
Adjustable Whole Life Insurance Permanent insurance in which the face amount and premium may change. Flexible based on changing needs.
Universal Life A term policy (considered permanent) with cash value (tax-deferred with a guaranteed interest rate), and an adjustable death benefit. The policy owner may surrender the policy for its entire cash value at any time. Two death benefit options.
Option A [Universal Life] Death Benefit = Cash Values + Remaining Pure Insurance (decreasing term + increasing cash values)
Option B [Universal Life] Death Benefit = Face Amount (pure insurance) + Cash Values (level term + increasing cash values)
Equity Index Universal Life Insurance Combines most aspects of traditional life insurance with the potential of earned interest based on the upward movement of an equity index.
Variable Life Guaranteed minimum death benefit (based on investment performance, cash value deposited in a separate account invested in securities (based on investment performance), and a fixed premium. The owner has control over the investment portion.
Universal Variable Whole Life Flexible premiums and death benefit with control over investment aspect.
Created by: PBowlds93
 

 



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