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Now that you have studied general life insurance concepts, you are ready to learn about the different types of life insurance policies. By the end of this chapter, you will know the major types of life insurance policies, their characteristics and functions, and who would be best served by each type. As you are reading about a policy, ask yourself what makes this type of policy different from the others. The process of determining the suitability of certain policies for different life situations can make it easier for you to distinguish between the many types of policies covered in this chapter.
| Term | Definition |
|---|---|
| Attained age | The insured's age at the time the policy is renewed or replaced |
| Deferred | Withheld or postponed until a specified time or event in the future |
| Face amount | The amount of benefit stated in the life insurance policy |
| Fixed life insurance products | Contracts that offer guaranteed minimum or fixed benefits |
| Lapse | Policy termination due to nonpayment of premium |
| Level premium | The premium that does not change throughout the life of a policy |
| Nonforfeiture values | Benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses |
| Policy maturity | In life policies, the time when the face value is paid out |
| Securities | Financial instruments that may trade for value (for example, stocks, bonds, options) |
| Variable life insurance products | Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance |
Terms to Know