Question

1. Briefly describe the various types of permanent life insurance policies (one sentence for each type)

2. How do policy loans in a life insurance policy work?

3. List the essential elements of a legally enforceable insurance contract.

4. Describe some key elements concerning insurance company investments (types of investment and risk)

Answer 1

Answer 1.

The different types of permanent life insurance policies are:

A) Ordinary or whole life: In this type there is a death benefit with a savings account. We need to pay premium on a regular intervals for this benefit.

B) Universal or adjustable life: In this case, we can increase the death benefit and the savings account may earn a money market interest rate

C) Variable life: In this we have a death protection along with a savings account and this can be invested in stocks, bonds and money market mutual funds.

D) Variable-universal life: Here the benefits of both the variable life and universal life policies are there.