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Related Flashcards
Related Topics
Cards In This Set
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What is the Principle of Life Insurance?
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Life insurance reduces uncertaintyReplaces the possibility of a larger loss (income) with a smaller one (premium)Does not eliminate risk
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Participating policies (par) are...
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Policies that may pay annual dividends to policy owners
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Nonparticipating policies (nonpar) are...
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Insurance policies that do not pay dividends to policy owners
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Money accumulated in a permanent policy that the policy owner may borrow as a policy loan or receive if the policy is surrendered before maturity
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Cash value
Can be referred to as Living Benefit |
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Assumes both principal (capital) and interest are liquidated over the relevant time period to provide the required income for the dependents
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Capital Liquidation
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A measure of the actual future earnings and services of a person at risk in the event of premature death. The objective is to provide the proper amount of coverage as determined by the value of the individual to his/her dependents
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Human Life Value Approach
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Determines a need for coverage upon the premature death of an individual. Always assumes the death to be immediate
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Needs Analysis Approach
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Assumes the desired income will be generated by the investment earnings only, thus retaining or conserving the principal or capital invested
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Capital Retention/ Conservation
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A nonqualified deferred compensation plan that allows employers to provide additional retirement income to key, highly compensated employees.
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SERPSupplemental Executive Retirement Plan
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A process where the policy loans are used to pay the premiums on cash value life insurance under a systematic plan of borrowingLoans are no greater than the amount of each premium
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Minimum Deposit Plans
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The policy owner must be advised each year as to how much to borrow (if any)Each year's interest is paid in cash
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Minimum Deposit Plans
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