Classes of Life Insurance Policies
Classes of Life Insurance Policies
Insurance Licensing Definitions
Permanent versus Term: The two basic types of life insurance policies are term life insurance and permanent life insurance.
Permanent life insurance
- Permanent insurance protection
- More expensive to own
- Builds cash value
- Loans are permitted against the policy
- Favorable tax treatment of policy earnings
- Level premiums
Term life insurance
- Temporary insurance protection
- Low cost
- No cash value
- Usually renewable
- Sometimes convertible to permanent life insurance
Participating versus Nonparticipating (Par vs . Non-par)
A mutual life insurer may issue policies on both a participating (sharing in the profits of the company) and nonparticipating basis, provided that the right or absence of participation is related to the premium charged. The policy must clearly state whether it is participating or nonparticipating.
Ordinary versus Industrial (Home Service)
Ordinary life insurance policies normally have larger face value amounts- more than $1,000, and have a variety of structures and benefits. Industrial life policies are simple policies with benefits of $1,000 or less (but may be more) AND premiums that are collected at the insured's home on a weekly or monthly basis. The name comes from the fact that they were originally sold to industrial workers who were paid weekly; they are also known as home service policies since the agent normally comes to the home to collect the premium. The agent's territory is called his debit. This method of marketing today represents less than 2% of life insurance in force in the U.S. Needs that Life Insurance can cover:
- Final Expenses: Medical bills from a final illness and funeral costs. These are generally handled with cash, borrowing, liquidating property, or with life insurance.
- Family Income Protection: This includes Retirement Income, Housing, and a Monthly Family Income.
- Incomplete Financial Goals: Estate Planning, Education Expense protection for one s children, and Charitable Giving.
- Unsatisfied Major Obligations: Business Life Insurance and Debt Repayment.
Individuals considering becoming licensed to provide insurance should look into one of our many insurance licensing courses.
Get Continuing Education:
Related Insurance Agent Pages
- Health Prelicensing Materials for the Health Insurance License Exam
- Major Medical Insurance Health Licensing FAQ
- Indemnification/Risk/Policyowner CPMI Insurance Definitions
- Life Insurance Agents Finding a Career in Insurance
- If I am a health insurance agent, should I sell life insurance too?
- How Hard is it to Earn a Living as an Insurance Agent?
- What type of insurance agent should I be?
- Selling Life and Health vs Property and Casualty Insurance
- What Type of Insurance Is Best For Starting Out?
- Which pays better, Property and Casualty or Life and Health?
- Insurance Career Training, Help, and Education
- What is the Difference in Income Between Different Types of Insurance?
- What insurance company should I work for?
- What is an Independent Agent? Insurance Career FAQ
- How to Become an Insurance Agent
- CPMI Pro Courses FAQs
What Your Colleagues Are Saying
“Thanks to your program and lots of studying I passed my Life & Health exams. Tell everyone to follow the instructions & study like your company advises. It sure seems to work.”
“Your Exam Advantage questions are really good preparation…You really helped me know what I was going to be up against.”
“Using your company has been a wonderful experience. Working with Exam Advantage has been one of the least stressful parts of my entire job! Thank you!”
“I want to thank you for your tips. I did exactly as you advised with the reading of the manual, online study & breaks, and no worrying I passed the test! Thank you!”
Your program really helped me focus on the material that had been difficult for me. I passed this time! Thank you!