Page 63 - Book5E

9. Permanent life—Life insurance that is designed to provide lifelong protection with generally level premiums. There are three main types: whole, universal, and variable. All permanent policies accumulate cash value.
10. Policy—The contract or agreement made between the insurer and the insured.
11. Premium—The payment to the insurance company for insurance coverage.
12. Term life—Life insurance that provides coverage for a specific period of time, usually from 1 to 20 years. Term policies provide a death benefit only if the insured person dies during the term.
13. Universal life—A permanent policy that gives the owner the right to vary premium payments and the death benefit within certain prescribed limits. The rate of return on the accumulation account fluctuates according to investment performance but will not fall below a guaranteed minimum rate of return, such as four percent.
14. Variable life—A permanent policy under which the cash value of the policy may fluctuate according to the investment option performance of a separate account fund. Most variable life policies guarantee that the death benefit will not fall below a specified minimum.
15. Whole life—A permanent policy designed to last for life and for which premiums stay level.
Let’s Review__________________________________
Now that you’ve had a chance to familiarize yourself with key life insurance terms, take a few moments to test your knowledge by matching each term to the correct definition on the next page. Write in the letter that corresponds to the correct definition next to the term. The answers are provided on the final page of the chapter.
Understanding Your Life Insurance Policy
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