Which of the following term life insurance policies would have the lowest 1st-year annual premium, all other factors being equal?
The 1-year term life insurance policy
would have the lowest first-year premium of the choices provided.
also, the cash value grows in a straight line, up until it matches the face value.
Straight Life Policies
will have the lowest annual premium. Form of Whole Life Insurance.
Term life insurance
is the easiest to understand and has the lowest prices. It covers you for a fixed period of time, like 10, 20 or 30 years. If you don’t die during the term, your coverage ends and no one receives any money.
Which of the following term policies cost the least?
Term life
is usually the least costly life insurance available because it offers a benefit for a restricted time and provides only a death benefit. For example, a healthy 35-year-old non-smoker can typically obtain a 20-year level-premium policy with a $250,000 face value for $20 to $30 per month.
Which one of the following types of term life insurance would be the most expensive all else being equal?
Choosing convertible insurance doesn’t mean that you’ll be able to get a permanent policy for the same price as a term policy if you make the conversion. All else being equal,
permanent insurance
is always more expensive than term insurance because it presents a greater risk to the insurance company.
The “mode” is simply the frequency of premium payments, with the options being annual, semi-annual, quarterly, and monthly. The least expensive payment mode is
annual
and the most expensive is quarterly (sometimes monthly, but this varies by company).
What is the advantage of reinstating a policy instead of applying for a new one?
The benefit of reinstating an existing policy rather than applying for a new policy is
that you’ll likely pay less
. If your health hasn’t changed, your insurer will honor the original pricing on your policy, Ardleigh says. If your health has changed, that could affect your rate (or your insurability).
What is the most expensive type of life insurance?
Whole life insurance
is considered to be the most expensive type of life insurance. Its premiums can be as much as five to 10 times more expensive than term life insurance premiums.
What is a good amount for life insurance?
Most insurance companies say a reasonable amount for life insurance is
six to 10 times the amount of annual salary
. Another way to calculate the amount of life insurance needed is to multiply your annual salary by the number of years left until retirement.
What is better term or whole life?
Term coverage only protects you for a limited number of years, while
whole life provides lifelong protection
—if you can keep up with the premium payments. Whole life premiums can cost five to 15 times more than term policies with the same death benefit, so they may not be an option for budget-conscious consumers.
What is a disadvantage of term life insurance?
One of the major disadvantages of term insurance is
that your premiums will increase as you get older
. When you buy term life in your 20s or 30s, it will be much cheaper compared to when you need to renew your policy later on in your 50s or 60s.
What is a 65 life policy?
65 Life:
You pay level premiums until age 65, at which point coverage remains in place but there are no further payments
. 90 Life: You pay premiums until age 90, after which point your coverage continues but there are no more payments.
What are the two components of a universal policy?
Universal life insurance has two components:
death benefit coverage and an accumulating cash value
. When you pay your monthly premium, it’s split between the two parts of your policy, with a portion going to each.
What are the four types of term insurance?
Term insurance plans, too, come in various forms. Namely,
level term insurance, increasing term insurance, decreasing term insurance, the return of premiums plans, and convertible term plans
.
Do you get your money back at the end of a term life insurance?
If you outlive your policy term,
you get your money back
, unlike with regular term life insurance. It’s much more expensive than regular term life insurance. The returned money isn’t taxed since it’s not income, but simply a return of the payments you made. You don’t earn interest on the money returned to you.
What is a 5 year term life insurance policy?
5 year term life insurance is the
most cost-effective life insurance plan
that one can consider for short-term investment basis. The policy comes with a death benefit, which is ideal for covering immediate financial liabilities.
