| A | B |
|---|
| Mortality | avg. number of deaths in a certain age group in 1 yr. |
| Purpose of premiums | in exchange for policy protection for the insured |
| Mortality factor | number of deaths in a given population |
| Mortality is based on | large risk pool of people over time |
| Interest factor | rate of earning on investments; helps to reduce premium rates |
| expense factor | covers operating expenses |
| loading charge is also known as | the expense factor |
| Factors that impact premium amount | age, gender, health, occupation, hobbies, habits, benefits, options, riders |
| The higher the frequency of payments = | the higher the premiums |
| reserves | money that will fulfill the insurance companies obligations to pay future claims |
| each state has its own | reserve requirements |
| earned premiums | amt. an insurer is entitled for coverage provided |
| unearnerd premiums | amt. collected from insurer for future coverage |
| cost basis | total of premiums paid into the policy minus total dividends received in cash or used to offset premiums |
| net premium | premiuim that makes provision for mortality losses only while being influenced by the intereest rate assumed, gender, benefit to be provided and the mortality rate |
| gross premium | actual premium paid by the policy owner for life insurance coverage |
| gross premium = | net premium + insurer expenses |
| single premium funding | policy owner pays a single premium that provides protection for life as a paid up policy |
| single premium funding provides | lowest total premium and fastest build up of cash value |
| level (fixed) premium funding | policyowner pays more in early years for protection to help cover costs in later years |
| level premium funding also called | fixed premium funding |
| shorter premium pay period | higher periodic premiums,but lower the total premium paid and quicker cash value builds |
| modified premium funding | initial premium that is lower than it should be during an introductory period of time; after that premium increases to amt. greater than it would have been & remains level |
| surrender cost index | uses a complicated formula where the net cost is averaged over the # yrs the policy was in force to arrive at an average cost per thousand |
| why surrender cost index is used | for a policy that is surrendered for its cash value at the end of the period |
| living benefits | option to use some of the future death benefits before death |
| cash value | cash or equity that accumulates may be used as collateral, supplemental retirement income, or withdrawn for emergencies |
| life settlement | sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit |
| policy dividends | refund of part of the premium under a mutual insurers participating policy |
| death benefit settlement options | lump sum, interest only, fixed period, fixed amount, life income, joint and survivor |
| examples of who can be beneficiaries | individuals, business, trust, estate, charities, minors, class |
| by order of successsion | primary, secondary and tertiary |
| primary succession | first in line to receive death benefit proceeds |
| secondary succession | second in line to receive death benefit proceeds if primary beneficiary dies first |
| tertiary succession | third in line; if no one is named it will go to the insured's estate |
| distribution by descent: | per stirpes or per capita |
| per stirpes | by bloodline; benefits paid to heirs of beneficiary when benficiary dies before insured |
| per capita | evenly distributes amongst all living bneficiaries |
| per capita also means | "by the head" |
