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Ch2 Life insurance
| Question | Answer |
|---|---|
| Beneficiary | A person who receives the benefits of an insurance policy |
| Death benefit | The amount paid upon the death of the insured in a life insurance policy |
| Cash value | Equity amount Accumulated in permanent life insurance |
| Estate | A persons net worth |
| Illustrations | Presentation or the Piction of non-guaranteed elements of a life insurance policy |
| Life insurance | Coverage on human lives |
| Liquidation | Selling assets in order to raise capital |
| Lump sum | Payment of the entire benefit in one sum |
| Minor | A person under legal age |
| Solvency | Ability to meet financial obligations |
| Insurable interest | The policy owner must face the possibility of losing money or something of value in the event of loss |
| At the time of the application | In life insurance, insurable interest must exist between the policy owner and the insured at the time of the application. |
| A valid insurable interest may exist between the policy owner and the insured when the policy is ensuring any of the following | 1. Policy owners on life 2. The life of a family member a spouse or a close blood relative 3. The life of a business partner, key employee, or someone who has a financial obligation to the policy owner |
| Personal uses of life insurance 1. Survival protection | The death of the primary wage earner dying usually hurts cash flow in the family. The death of a spouse who cares for minor children can also cause great financial hardship for the survivors |
| Personal uses of life insurance 2. Estate creation | Estate creation is especially important for young families that are getting started and have not yet had time to accumulate assets. Examples of estate creations earnings savings and investments. |
| Personal uses of life insurance 3. Cash Accumulation | Life insurance may be used to accumulate specific amounts of monies for specific needs with guarantees that the money will be available when needed |
| Personal uses of life insurance 4. Liquidity | Means the policies cash value can be borrowed against at any time and used for immediate needs |
| Personal use of life insurance 5. Estate conservation | Life insurance proceeds may be used to pay inheritance taxes in federal Estate taxes so that it is not necessary for the beneficiaries to sell off the assets |
| Viatical settlements | Allow someone living with a life-threatening condition to sell their existing life insurance policy and use the proceeds when they are most needed, before their death |
| Victors ( or the owners of the Original policy) | Receive a percentage of the policies face value from a third-party who purchases the policy. The new owner continues to maintain premium payments and will eventually collect the entire death benefit |
| Viator | Means the owner of a life insurance policy who enters or six to enter into a viatical Settlement contract |
| Viator does not include | 1 a licensee 2 an accredited investor or qualified institutional buyer3 a financing entity 4 a related provider trust |
| Viatical settlement broker | Means a person who on behalf of aviator a.m. for a fee, commission, or other value consideration, negotiates viatical Settlement contracts between a viator and one or more viatical settlement providers |
| Viatical settlement provider means | Means a person, other than a viator, that enters into or effectuates( makes effective) a viatical settlement contract |
| Viatical settlement contract | Means a written agreement entered into between a viatical settlement provider and a viator. |
| Agreement to transfer ownership or change the beneficiary designation of a life insurance policy | At a later date, regardless of the date that compensation is paid to the Viator. The agreement must establish the terms under which the viatical settlement provider will pay compensation in return for the viator’s a |
| General Rules |
Created by:
bkgee