LIFE INSURANCE

WHAT ARE THE FOUR BASIC LINES

OF BUSINESS PERFORMED BY LIFE
INSURANCE COMPANIES?

 Ordinary Life
 Group Life
 Credit Life
 Other activities
ORDINARY LIFE
 Marketed on individual basis in units of $1000
 FIVE BASIC CONTRACTUAL TYPES
 Term Life
 Closest to pure life insurance; no savings element attached
 Whole Life
 Protects an individual over an entire lifetime
 Endowment Life
 Combination of a pure term insurance w/ a savings element
 Variable Life
 Invests fixed premium payments of stocks, bonds, etc.
 Universal Life and Variable Universal Life
 Allows the insured to change both the premium amounts and
the maturity of the life contract.
GROUP LIFE INSURANCE

 Covers a large no. of insured persons under a

single policy
 Contributory (employee and employer)
 Noncontributory (employer)

 Principaladvantage over ordinary life policies

involves COST ECONOMIES
CREDIT LIFE
 Protects lenders against a borrower’s death
prior to the repayment of a debt contract
such as a mortgage or a car loan.
 Face amount = Outstanding Principal and
Interest.
OTHER LIFE INSURER ACTIVITIES
 Annuities
 Represent the principles of life insurance
principles.
 LIFE INSURANCE – build up a fund; eventual payout of
a lump sum to the beneficiary
 ANNUITY – liquidating a fund over a long period of
time.
 Private Pension Funds
 Guaranteed Investment Contracts (GIC)
 Accident and Health Insurance
 Protects against morbidity or ill-health risk.