BU353 Chapter Notes - Chapter 13: Whole Life Insurance, Term Life Insurance, Life Insurance
Document Summary
A legal agreement that pays an amount of cash, referred to as the death benefit, upon the death of an insured life. Imagine what would change in family"s day-to-day lifestyle if the primary income earner died. If life insurance is needed, the next step is to determine whether the need for protection is of a temporary or permanent nature. Face amount stated amount of overage purchased by the policyholder. Some are a simple rule of thumb ex. 6% of annual earnings and some are complicated formulas. Provides a death benefit over a fixed term such as 1, 5, or 10 years. The policy can be renewed at a predetermined premium at the end of the term without having to gain provide evidence of insurability, up to an advantaged age (typically 75-100) An insured can covert a current term insurance policy for a similar amount of permanent insurance at a later date.
