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Fundamentals of Risk and Insurance, 11th Edition by Therese M. Vaughan, Emmett J. Vaughan

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CHAPTER OBJECTIVES

When you have finished this chapter, you should be able to

  • Distinguish between the two broad types of life insurance contracts
  • Explain how the cash value arises in some life insurance contracts
  • Distinguish between participating and nonparticipating life insurance contracts
  • Explain the importance of renewability and convertibility features in term life insurance policies
  • Describe the distinguishing characteristics of universal life insurance, adjustable life insurance, and variable life insurance
  • Identify and describe the four major marketing classes of life insurance
  • Describe the distinguishing features of group life insurance and explain the basis for its cost advantages

We begin our study of specific types of insurance with life insurance. We do this for two reasons. First, the life insurance policy is one of the simplest of all the insurance contracts. The insuring agreement is straightforward and to the point, there are relatively few exclusions, and the conditions and stipulations are easily understood.

In addition, we treat life insurance before the wide range of other insurance coverages that may be needed by individuals because many college students will soon be considering the purchase of life insurance, some even before graduation. By treating life insurance at this point, some students may avoid costly mistakes.

SOME UNIQUE CHARACTERISTICS OF LIFE ...

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