Industrial life insurance - answer issues very small face amounts, such as $1,000 or
$2,000. Premiums are paid weekly and collected by debit agents. They were designed
for burial coverage.
Ordinary Life Insurance - answer is life insurance of commercial companies not issued
on the weekly premium basis. It is made up of several types of individual life insurance,
such as temporary (term), permanent (whole).
Group Life Insurance - answer is insurance written for members of a group, such as a
place of employment, association, or a union. Coverage is provided to the members of
that group under one master contract. The group is underwritten as a whole, not on
each individual member. One of the benefits of group life coverage is usually there is no
evidence of insurability required.
Term life insurance - answer gives you the greatest amount of coverage for a limited
period of time. Term insurance is only good for a limited period of time because it has a
Termination date. Term insurance is an inexpensive type of insurance, making it an
attractive option for large policies. Term life is the CHEAPEST type of pure life
insurance, and due to having a termination date and not having any cash value, it will
ALWAYS be cheaper than a whole life policy with the same face value. It provides a
pure death protection since it only pays a death benefit if the insured dies during the
policy term.
Level term - answeris also called level premium level term, has a level face amount and
level premiums. Premiums tend to be higher than annual renewable term because they
are level throughout the policy period. However, the premiums will increase at each
renewal. Life insurance written to cover a need for a specified period of time at the
lowest premium is called Level Term Insurance. Term insurance always expires at the
end of the policy period. For example, if D needs life insurance that provides coverage
for the remainder of her working years and wants to pay as little as possible, D would
need Level term. Level term provides a fixed, low premium in exchange for coverage
which lasts a specified time period.
Decreasing term - answeris term life insurance that provides an annually decreasing
face amount over time with level premiums. These policies are usually used for
mortgage protection. A decreasing term policy is a type of life policy which has a death
benefit that adjusts periodically (according to a schedule) and is written for a specific
period of time. Decreasing term policies are usually written for a mortgage or other debt
that typically decreases over time until it is paid off. For example, a 15 year decreasing
, term policy could protect a 15-year mortgage. As the mortgage balance reduces each
year, the face value of the insurance policy will adjust accordingly to match. After the
mortgage is paid off, the insurance policy will expire.
Credit policies - answerare typically purchased using a decreasing term life insurance
policy, with the term matched to the length of the loan period and the decreasing
insurance amount matched to the declining loan balance. Since Credit life insurance is
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, credit policies can only be purchased for up to the
amount of the debt or loan outstanding. For example, if you wanted an insurance policy
to protect a $20,000, 5-year auto loan, you would use a 5-year decreasing term life
insurance policy with an initial face value of $20,000. You will pay the same level
premium every month for the 5-year term of the policy. The face value will start out at
$20,000 and change according to a schedule (the decreasing balance of the auto loan).
After 5 years, the car will be paid for and the insurance policy will no longer be needed.
Increasing term - answeris term life insurance that provides an increasing face amount
over time based on specific amounts or a percentage of the original face amount.
Convertible term - answeris a provision that allows policyowners to convert their term
insurance into permanent policies without showing proof of insurability. Convertible
Term provides temporary coverage that may be changed to permanent coverage
without evidence of insurability. For example, if you take out a term insurance policy
when you are young to take advantage of your good health and the policy's lower
premium, but want the option convert the policy to a permanent one for final expense
benefits once your finances improve, you would want a convertible term life policy. The
conversion privilege of a group term life policy allows an individual to leave the group
term (temporary) plan and convert his or her insurance to an individual (permanent)
policy without providing evidence of insurability. The most important factor to consider
when determining whether to convert term insurance at the insured's attained age or the
insured's original age is the premium cost. The number one factor which impacts life
insurance premium cost is the insureds current or attained age. For example, a $25,000
policy on a healthy 7-year-old boy will cost substantially less than a $25,000 policy on a
57-year-old man. Whether converting an individual or group term insurance policy,
although your insurability is guaranteed, your age is typically reevaluated to your current
(attained) age, not left at the age you were when you applied for the original term policy.
Convertible Term would allow you to take your temporary coverage and change it to
permanent coverage without evidence of insurability or good health, but your premiums
will increase due to using your attained age.
Renewable term - answeris term insurance that guarantees the insured the right to
continue term coverage after expiration of the initial policy period without having to
prove insurability. For example, if you have a 10-year renewable and convertible term;
After the 10 years are up, the policy terminates or you can renew it. If you renew it the
premium price will go up, and you will have the policy for another 10 years. This cycle
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