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bankers life chapter 2 (riders (disability income rider (policyowner…

- - - - cover a short term need, like a mortage
      - can buy large premiums for relatively low costs when younger
      - interested mostly/nly in death benefits
    - - death benefit stays the same throughout the period stipulated in the policy.
      - premiums may also stay the same for the length of the policy
    - - provides decreasing amount of coverage during the term of the policy
        
        death benefit begins at a certain amount and then gradually decreases
        
        formula for decrease occurs over time and is included in policy
      - most common use is to provide coverage while paying off a debt
        
        as a debt is being paid off, the outstanding amount decreases
        
        the coverage provided by the decreasing term is likewise reduced
      - mortgage protection policy
        
        coverage matches the amount outstanding on the mortgage at a particular time, both principal and interest
        
        term of policy is usually the length of time remaining on the mortage
        
        as the outstanding mortgage amount is paid off, death benefit decreases accordingly. benefit at any time typically equals the amount still owed
        
        premiums generally remain level during the entire life of the policy
      - credit policy
        
        addresses non-mortgage debts that are significant and paid for in installments
        
        policy matches the full amount of the debt at the onset, then gradually diminishes at the same rate that the debt is paid off
        
        once debt is discharged, coverage ends
    - - combats inflation
      - meets additional responsibilities in the future
      - provides a death benefit that begins at one amount and then increases at stated intervals over the policy term
      - premiums will increase due to higher death benefits and attained age (the age of the insured at the intervals for renewal)
    - - renewability
        
        optional provision that allows the owner to renew coverage at end of term
        
        don't have to prove insurability, but there are conditions attached to renewability
        
        premium may increase because greater age at renewal time
        
        renewal option not indefinite
        
        provider would suffer too much risk
        
        insured with most mortality risk would be the ones most likely to renew indefinitely
      - convertability
        
        optional provision that allows policyowner to convert to permanent coverage
        
        dont have to prove insurability
        
        may charge extra premium for the right to convert to permanent coverage
        
        to prevent adverse sel. most insurers limit the conversion option via can't convert after a certain age, or after the term policy has been in force a certain number of years
        
        if converted, the new policy of permanent insurance is issued
        
        the premium for the new policy is higher because the permanent builds CV and the attained age is higher than when the original policy was issued
  - - - one portion of premium pays for insurance protection policy provides
      - other portion of premium goes toward cash value build up
    - - requires premiums to be paid fo left of insured's life
      - premiums remain the same while policy is in force, which is until the insured dies or reaches age 100.....
      - upon death, the policy pays the face amount (death benefit) to the beneficiary
      - as long as insured lives and continues to pay premiums, the cash value in the policy accumulates year by year
      - types
        
        variable life
        
        limited pay
        
        modified endowment
        
        single premiium whole life are an example of policies that fall into the category of the MEC
        
        single premium
        
        a permanent policy that fails the seven pay test
        
        mecs form a special category of life insurance subject to special taxation rules
        
        considered to be a close relative to investments because of the emphasis on tax deferred build-up of cash value
        
        if cash value accumulates too fast in life insurance policy, it might be considered more of an investment vehicle than protection against premature death
        
        mecs have some, but not all of the tax advantages of regular life insurance policies because of this view by congress
        
        drawbacks
        
        2 more items...
    - - as long as there is enough cv to pay for the monthly premium, the insurance is in force
      - amount and timing of premium payments may be adjusted
      - premiums go into cv, if more is put in than insurance protection requires, cv builds value
        
        cv gains monthly value from interest, loses from cost of insurance protection and expense charges
      - flexible premiums, cvs, and adjustable death benefit
      - savings grow on tax deferred basis
      - owner may take loans from policy using cv as security
      - death benefit options
        
        level death benefit. may be able to increase death benefit amount without purchasing a new policy, but would have to prove insurability
        
        if cv approaches or equals face value before age 95(...), the universal life is no longer considered life insurance
        
        2.death benefit is made up of face value and cash value
    - - flexible premium, adjustable death benefit (like universal), and also investment options of variable life
        
        agents must be nasd registered
- - - - amount is usually the same as the death benefit of the policy (double indemnity) (but could be triple)
  - - - diagnosed as terminally ill, requires long term care, requires permanent confinement in a nursing home
  - - - usually provides that the accidental death benefit will also be paid if the insured loses sight in both eyes or suffers the loss of any two limbs
        
        sometimes a smaller amount may be paid for the loss of sight in one eye or the loss of one limb
  - - - usually covers policyowners who are also the insured
  - - - written for an amount that may be up to three through five times the death benefit of the permanent policy to which it is attached