Life Insurance Product Types Flashcards

What are 'paid-up additions' in a whole life insurance policy?

Answer: Small amounts of additional permanent insurance purchased using dividends

Paid-up additions are small increments of fully paid permanent insurance purchased using policy dividends, increasing both the death benefit and cash value.

What is a 'joint first-to-die' life insurance policy?

Answer: A policy covering two people that pays out when the first insured dies

A joint first-to-die policy covers two lives and pays the death benefit upon the first death, commonly used by couples to protect the surviving spouse.

What is the purpose of a 'waiver of premium' rider on a life insurance policy?

Answer: It waives premium payments if the policyholder becomes totally disabled

A waiver of premium rider keeps the life insurance policy in force without premium payments if the policyholder becomes totally disabled as defined in the rider.

How does a 'guaranteed insurability' rider benefit a life insurance policyholder?

Answer: It allows the policyholder to purchase additional coverage at specified future dates without evidence of insurability

A guaranteed insurability rider allows the policyholder to purchase additional life insurance at specified future dates or life events without new medical underwriting.

What is an 'endowment' life insurance policy?

Answer: A policy that pays the face amount at death or upon surviving to a specified maturity date

An endowment policy pays the face amount either upon the death of the insured or if the insured survives to the policy's maturity date, whichever comes first.

What is 'creditor insurance' and where is it commonly sold in Canada?

Answer: Life and disability insurance sold by lending institutions to cover loan balances upon death or disability

Creditor insurance is sold by banks and other lenders to protect outstanding loan balances, paying off the debt if the borrower dies or becomes disabled.