knowledge topics
Term Life Insurance
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Explain the purpose of term life insurance.
- Explain for whom term insurance may be suitable.
- Identify types of term life insurance policies, such as:
- 5-year
- 10-year
- 20-year
- Annual Renewable Term
- Term-65
- Explain advantages and disadvantages of term life insurance.
- Explain options available upon maturity of a term life insurance policy.
- Estimate the need for term insurance.
- Explain the relationship between an individual’s age and the premium for a term life insurance policy.
- During the term of the contract
- Upon maturity / At renewal
- Calculate the amount that may be payable from a term life insurance policy.
- As a beneficiary
- As a policyholder
- Explain how each of the factors may impact the suitability of term insurance, such as:
- Likelihood of risk occurring
- Financial impact should risk occur
- Ability to self-fund the potential loss (using income, liquidation of assets)
- Tax impacts (associated with disposition of property and liquidation of assets)
- Impact on standard of life
- Impact on future goals
- Estate planning objectives
- Personal attitudes towards the use of insurance
- Length of coverage required
- Permanency of coverage required
- Age of life insured
- Health of life insured
- Cash flow available for premiums
- Policy features
- Evaluate how each of the factors may impact each use of insurance.
- Evaluate how each of the factors may impact the suitability of term insurance.
- Explain how each of the factors may impact the decision to renew or convert a term life insurance policy, such as:
- Need for insurance
- Goals
- Insurability
- Affordability
- Cost of establishing new policy
- Evaluate how each of the factors may impact the decision to renew or convert a term life insurance policy.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK
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