3.5 Specialized Policies
Juvenile
Juvenile insurance refers to a life insurance policy issued on the life of a minor. One common type is the Jumping Juvenile policy. This policy automatically increases the face amount at a specified age—typically between ages 21 and 25—without requiring evidence of insurability. The premium remains level for the duration of the policy, and the face amount commonly increases to approximately five times the original amount issued.
Joint Life (First to Die)
Joint Survivorship Life insurance—also known as second-to-die coverage—is a permanent policy that insures two or more individuals under a single contract. The death benefit is payable only upon the death of the last surviving insured. No benefit is paid at the first death.
Premiums are calculated using a joint issue age, typically based on the average age of the insureds, which generally results in a lower overall premium compared to purchasing two separate individual policies.
This type of policy is commonly used in estate planning to provide liquidity—such as a lump sum—to help pay estate taxes, settlement costs, or other financial obligations that arise upon the death of the second spouse.
Joint Survivorship Life (Last to Die)
Joint Survivorship Life is a permanent life insurance policy that covers two or more individuals under one contract. The death benefit is paid only after the last insured has died. No proceeds are distributed at the first death.
Premiums are determined using a joint issue age, typically calculated by averaging the ages of the insured individuals. This method generally produces a lower premium than purchasing two separate policies.
This type of policy is frequently used for estate planning purposes, particularly to provide a lump sum to cover estate taxes and other settlement costs upon the death of the second spouse.
Return of Premium Term
Return of Premium (ROP) Term insurance provides a refund of the premiums paid if the insured survives to the end of the policy term. If the insured dies during the term, the death benefit is paid to the beneficiary as with a standard term policy.
Because of the premium refund feature, ROP policies require higher premiums than traditional level term insurance.
Quiz
1. Which of the following best describes a Jumping Juvenile policy?
A. A policy that decreases the face amount at age 21
B. A policy that increases the face amount at a specified age without evidence of insurability
C. A term policy issued to minors that expires at age 25
D. A policy that requires proof of insurability at the time of increase
Correct Answer: B
Rationale: A Jumping Juvenile policy automatically increases the face amount—commonly to five times the original amount—at a specified age (typically 21–25) without requiring evidence of insurability. The premium remains level for the life of the policy.
2. When is the death benefit paid under a Joint Survivorship (Last-to-Die) policy?
A. Upon the first insured's death
B. Upon the death of either insured
C. Upon the death of the last surviving insured
D. At the policy's maturity date only
Correct Answer: C
Rationale: A Joint Survivorship (Last-to-Die) policy pays the death benefit only after the last insured dies. No proceeds are paid at the first death. This structure makes it particularly useful for estate planning purposes.
3. Why are premiums for Joint policies often lower than purchasing two separate policies?
A. Because only one insured is covered at a time
B. Because premiums are based on a joint issue age derived from averaging the insureds' ages
C. Because the death benefit is reduced
D. Because underwriting is not required
Correct Answer: B
Rationale: Joint policies calculate premiums using a joint issue age, typically based on the average age of the insured individuals. This underwriting approach generally produces a lower combined premium than two individual policies.
4. What is a common purpose of a Joint Survivorship (Last-to-Die) policy?
A. Income replacement for a surviving spouse at first death
B. Providing college funding for children
C. Paying estate taxes and settlement costs after the second spouse's death
D. Covering temporary business loans
Correct Answer: C
Rationale: Joint Survivorship policies are frequently used in estate planning to provide liquidity—such as funds to pay estate taxes or other settlement expenses—upon the death of the second spouse.
5. Which statement accurately describes Return of Premium (ROP) Term Insurance?
A. It builds cash value like whole life insurance
B. It refunds premiums only if the insured dies during the term
C. It refunds premiums if the insured survives the term, but requires higher premiums than level term
D. It guarantees investment returns on premiums paid
Correct Answer: C
Rationale: Return of Premium term insurance refunds premiums paid if the insured survives the policy term. Because of this refund feature, premiums are higher than traditional level term insurance. It does not build cash value or function as an investment product.