What is interest sensitive insurance?

What happens under an interest sensitive whole life policy?

An interest-sensitive whole life policy is a whole life policy. The policy differs from ordinary whole life in that it has a guaranteed maximum premium and guaranteed minimum cash value based on a guaranteed minimum interest rate. … As with other cash value policies, the cash value account is credited with interest.

What is interest sensitive term?

Interest sensitive liabilities are types of short-term deposits with variable interest rates that a bank holds for customers. Interest sensitive liabilities make up a significant amount of the assets of most banks, encompassing money market certificates, savings accounts, and the Super NOW account.

Do you have to pay interest on insurance?

You don‘t need to pay back the loan in a set period, as is required of many other forms of loan. However, if you don’t pay the insurer the annual interest, which can be fixed or variable, the interest payment will be added to the value of your outstanding loan.

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What does interest sensitive whole life insurance mean?

Interest Sensitive Whole LifeSM is a guaranteed fixed-premium, non-participating permanent life insurance policy with a Guaranteed Minimum Cash Value that increases each year and equals the Face Amount at age 100. … It is not a complete description of all material provisions of the policy.

Which of the following life insurance policies would be considered interest sensitive?

Universal Life is a type of Whole Life insurance and is sometimes referred to on the exam as “interest sensitive” whole life. Universal Life policies have a cash value with a minimum guaranteed interest rate and an excess current interest rate.

What life insurance is not considered interest sensitive?

A whole life insurance policy’s cash value is not very interest sensitive.

How do you know if a bank is liability sensitive?

A liability-sensitive bank has a long-term asset maturity and repricing structure relative to a shorter-term liability structure. … Due to lower prepayments in a rising rate environment, the duration of lower-coupon, fixed-rate mortgages will extend and banks will be locked into lower-yielding assets for longer periods.

What does happen if a financial institution has more interest rate sensitive liabilities than interest rate sensitive assets?

A negative gap, or a ratio less than one, occurs when a bank’s interest rate sensitive liabilities exceed its interest rate sensitive assets. … A positive gap means that when rates rise, a bank’s profits or revenues will likely rise.

What if my life insurance beneficiary dies before me?

If your primary beneficiary — your spouse — dies before you, your insurance policy proceeds will go to your secondary beneficiary, your sister. … If you were to die without naming a new beneficiary, the life insurance death benefit would go to your estate.

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What are 4 types of whole life policies?

Whole life insurance has several variations, including limited payment, modified, single-premium, and variable whole life. Different types offer alternative payment options or investment methods.

Is Universal Life Insurance interest sensitive?

There are four basic interest sensitive whole life policies: Universal Life The universal life policy is actually more than interest sensitive as it is designed to reflect the insurer’s current mortality and expense as well as interest earnings rather than historic rates.