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10 Cards in this Set
- Front
- Back
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What is Term Life Insurance? |
- Life insurance that expires at the end of the term period - Typical term periods: yearly, 5/10/20/30 years, to age 65 |
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What are the features of Term Life Insurance? |
- Death benefit if the insured dies during the term period - No cash value accumulation |
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When is Term Life Insurance Indicated? |
- Starting LI program -- initial term premium much less than permanent LI premium - Funding "temporary" family needs -- family income for spouse and children, debt liquidation, college education |
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What are the Advantages of Term LI? |
- Face amount paid immediately at death - The death benefit is income tax-free - Not part of probate estate (no delay in payment, no probate fees) - Policy proceeds protected from creditors |
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What are the Key Terms LI Policy Provisions? |
- Guaranteed maximum and current premiums - Renewable - Re-entry Rating at renewal - Waiver of Premium- Convertible - Level Death Benefit |
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What are the Guaranteed Maximum and Current Premium provision of Term LI? |
- Guaranteed maximum premiums reflect maximum mortality and expenses. - Current premiums reflect current mortality and expenses |
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Mortality |
- Mortality varies based on the date of the mortality table - Standard mortality tables are dated 1958, 1980, 1994, 2004, 2010 |
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What are the expenses that insurance companies have? |
- Acquisition expenses - commissions - State premium taxes - General operating expenses - Underwriting expenses - Claims expenses - Federal income tax |
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Using the chart, during what time period are the current premium and maximum premium the same? (Chart on other side) |
5 year |
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What is the Renewable Policy Provision for Term LI? |
- Guaranteed renewal w/o evidence of insurability - Renewal at the insured's attained age - Check maximum age for renewal guarantee - Check the renewal premium schedule -- low initial with high renewal premium means a higher total cost. |
