Introduction to Permanent Insurance

Introduction to Permanent Insurance

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This is basic entry level introduction into permanent life insurance. Permanent life insurance is protects key family household earners, key business personnel and business succession entities with more than one partner as well as secure business loans. It also can be used for mortgage protection, estate taxes, fund nonprofits, education for children and grandchildren. Carriers have minimum and maximum death benefit amounts and age requirements.

Permanent life insurance can be purchased on two premium paying mortality chasses; contractually guaranteed and current company practice. Guaranteed premium products are whole life and guaranteed universal life. Non-guaranteed premium products are on a universal life chassis: current assumption (interest rates), indexed (indices) and variable universal life (equity/bond separate accounts.)

There are several riders that can be used with permanent life insurance. Some of the riders are inherent in the policy; others may be purchased in addition to the basic term premium: Return of Premium Rider, Wavier of Premium Rider, Child Rider, Spousal Rider, ADB Rider, Terminal Illness Rider, catastrophic Illness Rider, Unemployment Rider, Income Rider, Convertibility Rider, etc.

Gender, age and length of the policy (policy maturity dates can be designed to age 121.) are components of premium pricing, but none as important as the health condition of the proposed insured. There are five nonsmoking standard rating classifications and sixteen substandard classifications as well as three smoking standard classifications. The classifications are determined by mining the results of attending physician statements, the medical information bureau and ‘chem’ 24 examination including ancillary tests such as EKGs, X-Rays, Tread Mills, etc. Then those results are assessed on a debit and credit underwriting balance sheet for premium rate pricing. There are two age determination categories: age nearest and age last. In addition to this, some carriers allow for back dating to save age.

Carrier ratings are important because a policy is only as good as the carrier issuing it. There are several rating agencies that measure either claims paying abilities or financial strength

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