life insurance
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| insurable interest | show 🗑
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| show | 1. insuring his life 2. insuring family life 3. insuring business partner, key employee or someone who has a financial obligation
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| show | provide funds necessary if wage earner dies. must examine survivor's needs.
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| estate creation | show 🗑
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| show | true
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| cash accumulation | show 🗑
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| show | availability of cash to the insured. Some policies have cash you can borrow.
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| show | allow someone living with lifet threatening condition to sell their life policy and use proceeds when most needed, before death. These are separate contracts the insured sells the death benefits to a 3rd party at discounted rate.
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| concepts of viaticals | show 🗑
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| show | requires calculating of future earnings of insured using wages, inflation and # of yrs to retirement, and time value of money
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| how do you calculate life value? | show 🗑
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| show | based on family predicted needs if insured dies. Provides proper amount of coverage immediately. Gather this info. 1. debt 2. income 3. mortgage 4. expenses
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| show | final medical expenses,funeral, day to day family exp (mort, groceries, car, util) (other exp day care, ins, taxes)
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| show | insurance can be used to create a fund to pay off debt rather than transfer to heirs. Most lenders require a collateral assignment of life ins. as a condition of the loan)
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| show | ins. may be used for sudden death expenses like travel and lodging
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| show | ins can pay for college. For surviving spouse and children
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| bequests | show 🗑
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| social security black out period | show 🗑
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| retention | show 🗑
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| business uses of life insurance | show 🗑
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| buy sell agreement | show 🗑
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| show | under corp. ownership, if business owns policies, pays premiums and is the beneficiary, businesses are obligated to purchase interests of any disabled or deceased partner.
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| entity plan | show 🗑
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| show | policies owned by individcual business partners and they are beneficiary. Under this plan each partner agrees to sell to survivor each survivor agrees to
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| show | before an insurer can obtrain information from investigators regarding the insured this form must be presented
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| mortality tables | show 🗑
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| show | any person who solicits ins on behalf of a company takes or transmits a policy collects premiums examines loss and is compensated by premium where a part of premium is paid to the agent
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| license process | show 🗑
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| show | 18 y/o, past test in last 12 mo
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| show | individual and partnershps
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| show | indiv who is appointed by at least 1 ins co admitted or authorized to transact ins in TX.
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| Partnership ins license | show 🗑
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| who do agens represent | show 🗑
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| show | The Govenor
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| show | Commissioner of Insurance ONLY!
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| show | 5 years in an executive admin or attorney or CPA position
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| show | a producer who omits a statement that can mislead persns addressed
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| Term life insurance | show 🗑
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| accelerated death benefit | show 🗑
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| pure death protection | show 🗑
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| t or f term ins usually thought to be temp until permanent ins can be purchased | show 🗑
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| show | 1. level 2. increasing 3. decreasing
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| level term ins | show 🗑
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| show | premium increases each year with age
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| show | requires policy owner only pay premiums for a specified number of years or until death
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| show | can increase premium payments, have a limited pay policy
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| group life ins | show 🗑
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| show | amount of coverage can only be amount owed. Sold to a debtor and designed to pay off debt
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| show | employees
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| what can change in an adjustable life policy? | show 🗑
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| show | explains the rights and characteristics of an ins contract. not standard policy because exact wording not required in Texas
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| show | true
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| NAIC | show 🗑
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| entire contract | show 🗑
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| show | policy states when and how ften payments are made. This can be mo, qrtly, semi annually, or annually
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| mode | show 🗑
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| t or f if owner dies during the period of time insurance has been paid, ins co must also refund ins prem. proceeds along with policy proceeds | show 🗑
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| grace period | show 🗑
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| reinstatement | show 🗑
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| owners rights | show 🗑
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| cash surrender of a policy | show 🗑
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| what limi99ts amount to borrow against a policy? | show 🗑
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| other insured ride | show 🗑
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| cash option | show 🗑
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| autmatic prem. payment | show 🗑
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| show | the dividend option in which policy owner uses dividends to pay for insurance for 1 year
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| fixed period | show 🗑
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| reduction in prem option | show 🗑
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| show | if an ins owner becomes disabled, unable to work prem waived for life, This has a 6 mo waiting period to determine disability, then those 6 mos prem are refunded
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| show | insurer retains policy pr00ceeds and pays interest only to beneficiary. Insurer will usually guarantee an interest rate
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| can children convert to their own policy w/out proff of insurability? | show 🗑
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| show | uses the dividend to purchase 1 year ins in amount of cash value
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| show | a rider that may be attached to a life ins policy that will adjust the face amount based upon a specific index
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| guaranteed insurability rider | show 🗑
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| policy assignment | show 🗑
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| show | you don't contribute (100% employees allowed) 100% paid by employer
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| contributory policy | show 🗑
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| show | 1. convert policy to whole life which is more expensive this must be done within 31 days of leaving the company
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| show | Policy will terminate when loan amt and interest = or exceeds cash
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| accidental death rider | show 🗑
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| annuity | show 🗑
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| show | also called pay in period is the period of time over which the annuitant makes payments to an annuity payments earn interest tax deferred and grow
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| annuity perid | show 🗑
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| owner of annuity | show 🗑
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| show | person who receives benefits of the annuity. must be a natural person
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| Single premium immediate annuity | show 🗑
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| what is annuity income based on | show 🗑
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| deferred annuity | show 🗑
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| show | has a guaranteed surrender value of premiums paid
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| show | charged if surrendered prematurely. This charge generally reduces over time. 6% 1st year, 5,4,3,2,1
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| show | pay total premiums or cash vlaue whichever is greater to bene. If no bene then it is paid to the estate.
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| Life annuity | show 🗑
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| show | pmt ceases at death
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| 2 types of refund annuities | show 🗑
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| show | covers only 1 life
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| show | covers 2 or more lives joint and survivor - 1 dies = 1 dies and the other receives 2/3 or Joint life = 1 dies and pmts stop
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| show | short term annuities that limit amt paid to a certain fixed period. Pays until end of a fixed period. can be bought as fixed period or fixed amount installments
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| fixed period installments | show 🗑
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| show | fixed in the sense it provides: guarantee min rate of inter, fixed income pmts, ins co guarantees that specifies $$ amt for each pmt and length f period of pmts
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| general acct | show 🗑
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| guaranteed in rate | show 🗑
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| use of annuity | show 🗑
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| annuity tax deferred | show 🗑
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| show | annuities can be used to save for education. Not as popular as before, b/c they are LIFO. Interest is last in so the first out are taxable
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| variable annuity | show 🗑
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| equity index annuity | show 🗑
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| show | insured cannot outlive income. any monies not paid out are retained by the annuity company
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| show | guaranteed life time income. If annuitant dies balance goes to bene
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| life with period certain | show 🗑
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| show | 2 r more annuitants, recv' pmts till one dies then pmts stop.
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| show | income for 2 or more cannot be outlived, when 1 dies, ther receives 1/2 or 2/3 of orig pmt
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| show | pmt guaranteed for fixed period or until certain fixed amount paid. no life guarantee
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| show | they are tax free if taken as a lump sum if other method then some tax free and some taxed
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| show | any cash value above the basis is taxed as ordinary income.
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| show | refund of excess prem. and are not considered for income tax purposes. If dividends earn interest, the interest is taxed as ordinary income
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| show | the loan is made against cash built up. Insurer charges and interest rt.
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| show | if life ins policy is sold to a 3rd party, they may not be tax exempt. This does not apply if policy was assigned as collateral to a lender.
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| 3 reasons why life ins would be included as part of the deceased estate and subject t federal estate tax | show 🗑
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| show | anyone of the rights of policy ownership such as right to cash value. The entire amount will be taxable with estate even though paid to bene.
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| show | no
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| show | yes at the surrender of the policy
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| are whole life policy loans taxable | show 🗑
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| show | yes only on the interest
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| show | no
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| modified endowment contracts | show 🗑
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| show | made in 1988, to stop single pay lump sums into ins. (MECS) It determined if was policy over funded. Prem paid cannot = more than 7 yrs of premium
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| show | The 7 pay test did not apply. They were all grandfathered in to old period.
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| show | any time a MEC which was created to prevent pol.icy holders from using cash value policies like universal or whole life ssolely s a source of tax favor loans, had a death benefit increase that was a material change and a new 7 pay test was required
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| show | if policy is MEC if there is a gain, the first dollars recv'd by policy owner are considered to be excess of over premiums and immediately taxed. (LIFO) rule - interest comes out first
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| show | some portion of an annuity is taxable and some is not
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| cost base | show 🗑
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| show | portion taxable is interest earned on principle
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| early distribution of annuity | show 🗑
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| exclusion ratio | show 🗑
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| annuity death distribution | show 🗑
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| show | can only grow tax deferred if has a human annuitant. This prevents corps from purchasing an annuity and postponing taxation indefinetely
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| IRA's | show 🗑
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| show | 6%
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| earned income | show 🗑
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| t or f you can make IRA contributions in any mode and they will be tax deductable | show 🗑
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| show | IRA contribution for persons 50 and over can add an additional $1000
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| exceptions for early IRA penalty early w/d | show 🗑
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| show | true
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| show | 70 1/2 by Apr 1 of year following this b-day. if RMD is not taken there is a 50% penalty of shortfall from required amount
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| show | Owner of annuity dies before distrib, entire interest must be distributed on or before 12/31 of calendar yr that has the 5th anniv of owners death, unless there is a bene. bene can stretch out interest over his life
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| show | age not matter, distrib not mandatory, grow tax free as long as open for 5 years or more
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| when can a traditional IRA be converted to a Roth? | show 🗑
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| show | rollover or transfer
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| rollover | show 🗑
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| transfer | show 🗑
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| show | when one policy is exchanged for another ie. ins for ins, ins for annuity, annuity for annuity. as long as on the same life (person) no tax on these transactions
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| show | entitles owner to tax benefits
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| characteristics of a qualified retirement plan | show 🗑
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| show | at a company it is the officers, stockholders or high paid employees that make up this group - retirement plans cannot be written to suite them only
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| show | employer contrib tax deduct.; not taxed as income to employee, earnings grow tax deferred; lump sum distributions to employees are eligible for favorable tax treatment
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| show | death of participant, disability, divorce, a series of = payments at least annually over, loan from plan, a part of qualified rollover
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| show | SEPS, 401(k), Simple Plan, Tax shelter
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| SEP | show 🗑
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| show | Company profits put in a plan for employees. employees take less pay to put some in retirement plan. employers can match or do a % it must be systematic and substantial
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| Cash and deferred arrangement (CODA) | show 🗑
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| show | up to $16,500 this is not counted as part of the income
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| how can 401(k) be arranged | show 🗑
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| bonus or thrift plan | show 🗑
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| can you borrow from your 401 (k) | show 🗑
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| show | sm business </= 100 employees,receiving at least $5k in compensation from employer during previous yr, employees can defer $11,500 annually, emplyer mtches $ for $ up to 3%, taxes deferred for both employer and employee till w/d
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| tax shelter annuities (TDA) | show 🗑
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| contributions for tax shelter annuities | show 🗑
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| show | where employer will contribute money to employee retirement plan when there is a profit made by the company
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| life insurance | show 🗑
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| annuity | show 🗑
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| pay in phase of an annuity | show 🗑
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| show | this is the time period you are taking w/d
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| annuitant | show 🗑
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| beneficiary | show 🗑
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| How can you buy an annuity? | show 🗑
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| show | earns interst, fixed interest rate, or a variable rate, owner chooses where to put money (stocks, bonds), money is put in a separate account
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| show | true
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| show | an immediate annuity w/d within 12 months this must be stated with a lump sum
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| deferred annuity | show 🗑
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| show | lump sum, annuity certain, life annuity
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| show | 1. provisions 2. riders 3. options
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| show | return of excess premium refund of overcharged premium
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| 2 types of insurance companies | show 🗑
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| dividend in certain year was declared how do you receive it? | show 🗑
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| show | false all interest on dividend is taxable
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| Whole life adjustable policy | show 🗑
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| universal life | show 🗑
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| Option A and Option B | show 🗑
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| variable policy | show 🗑
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| equity index policy | show 🗑
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| show | transferof financial responsibility associated with a potential of a loss (risk) to and insurance company. This spreads cost of loss to many individuals
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| show | are conditions or situations that increase the probability of an insured loss occurring. Hazards are classified as physical hazards, moral hazards, or morale hazards.
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| what conditions go along with hazards | show 🗑
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| Physical hazards | show 🗑
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| moral hazards | show 🗑
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| morale hazards | show 🗑
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| show | the uncertainty or chance of a loss occurring
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| show | pure and speculative
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| pure risk | show 🗑
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| show | involves the opportunity for either loss or gain. An example of speculative risk is gambling. These types of risks are not insurable.
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| exposure | show 🗑
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| show | * The age of the insured;
* Medical history;
* Occupation; and
* Sex.
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| show | A large number of units having the same or similar exposure to loss are referred to as
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| Perils | show 🗑
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| show | insures against the medical expenses and/or loss of income caused by the insured’s sickness or accidental injury;
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| property insurance | show 🗑
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| show | insures against the loss and/or damage of property and resulting liabilities.
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| show | defined as the reduction, decrease, or disappearance of value of the person or property insured in a policy, by a peril insured against. Insurance provides a means to transfer loss.
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| what elements must be present in pure risk to make it insurable? | show 🗑
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| show | is the insuring of risks that are of a poorer class (more prone to losses) than the average risk.
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| show | true
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| how do underwriters protect insurer against adverse selection | show 🗑
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| show | is a principle stating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss.
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| reinsurance | show 🗑
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| show | The originating company that procures insurance on itself in another insurer
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| faculative reinsurance | show 🗑
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| show | a volun org that provides ins bfits for mbers of an affiliated lodge, relig org, or frat org with a rep form of gov.Since frat sell only to their mbrs and are charit instit, they are not subject to all of the regs that apply to insurers that ins to public
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| show | medicare, social security, fed crop insurance, national flood ins
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| difference between private and gov ins | show 🗑
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| admitted insurer | show 🗑
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| show | an insurance company that has not applied, or has applied and been denied a Certificate of Authority and may not transact insurance.
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| certificate of authority | show 🗑
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| domestic insurer | show 🗑
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| foreign insurer | show 🗑
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| show | an insurance company that is incorporated outside the United States.
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| what are the financial rating services of insurance companyies | show 🗑
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| Independent Agency System/American Agency System. | show 🗑
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| Exclusive Agency System/Captive Agents | show 🗑
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| show | an entrepreneur, empow by the insurer that he or she repres on an excl basis to sell life ins in a specified terr and to appt subagents. The gen agent may receive comp for ofc exp, advert and staff, and will recv' comm on sales and overrides on his agents
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| show | A sales force is supervised by a branch manager who, in contrast to the general agent, is a salaried employee of the insurer. The agents assigned to the branch office can be employees of the insurer or independent contractors.
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| Direct Response Marketing System | show 🗑
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| show | person who acts for another person or entity known as the principal, with regard to contractual arrangements with third parties.
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| show | true
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| show | express, implied, apparent
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| show | the authority a principal intends to grant to an agent by means of the agent’s contract. It is the authority that is written in the contract.
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| show | authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
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| apparent authority | show 🗑
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| fiduciary responsibility | show 🗑
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| show | a producer who handles insurer funds in a trust capacity. He or she does not commingle premiums collected with his or her own personal funds.
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| professionalism | show 🗑
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| show | an agreement between two or more parties enforceable by law.” In order for a contract to be legally binding or enforceable by law, it must have certain essential elements.
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| 4 elements of a legal contract | show 🗑
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| consideration | show 🗑
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| show | a contract in which unequal amounts or values are exchanged. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss.
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| personal contract | show 🗑
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| unilateral contract | show 🗑
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| conditional contract | show 🗑
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| principal of utmost good faith | show 🗑
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| show | referred to as reimburs is a provision in insurance policy that states that in the event of loss, an insured is permitted to collect only to the extent of his/her finan loss and is not allowed to gain financially because of the existence of contract.
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| representations | show 🗑
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| show | a misrepresentation would be considered fraud
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| warranty | show 🗑
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| show | egal term for the intentional withholding of information of a material fact which is crucial in making a decision. In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision.
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| fraud | show 🗑
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| show | the intentional act of relinquishing a known right, claim or privilege.
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| estoppel | show 🗑
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| show | business can suffer a financial loss because of the premature death of a key employee that has specialized knowledge, skills or business contacts. A business can lessen the risk of such loss by the use ins
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| executive bonus | show 🗑
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| indiv life insurance | show 🗑
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| group life ins | show 🗑
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| who pays taxes in group life policy? | show 🗑
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| characteristics of group policies | show 🗑
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| show | general term used to refer to various forms of whole life insurance policies that remain in effect to age 100 so long as the premium is paid.
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| show | Term insurance; Whole life insurance; Endowment insurance; Adjustable life insurance; Variable life insurance and Universal life insurance.
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| t or f not all policies issued by a mutual insurer are participating. | show 🗑
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| participating (par) | show 🗑
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| show | are contracts that offer guaranteed minimum or fixed benefits that are stated in the contract.
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| variable life ins or annuities | show 🗑
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| FINRA (financial industry regulatoryt authority) formerly NASD (nat assoc of Securities Dealers) | show 🗑
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| t or f variable contracts are securities and are regulated by SEC | show 🗑
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| show | accounts that must be established for variable products
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| factors in premium determination | show 🗑
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| mortality tables | show 🗑
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| NATURAL PREMIUM | show 🗑
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| show | Since premiums are paid before claims are incurred, insurance companies invest the money in an effort to earn interest. This interest is a primary factor in lowering the premium rate.
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| expense | show 🗑
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| net premium | show 🗑
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| loading | show 🗑
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| show | Mortality – Interest + Expense (loading) = Gross Premium
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| duty of agents | show 🗑
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| show | insurers marketing policies in Texas must maintain a system of control over the content, form, and method of dissemination of all advertisements on their policies.
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| show | writ stmnt with facts of pol. must have name,add, full name & home ofc or admin ofc add of the insurer, and generic name of basic policy and each rider. A policy summary will also include prem cash val, divid, surren val and death benefit for pol yrs
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| show | coverage begins only when the pre-paid application is approved by the insurer (but before the policy is delivered). Therefore, there is no coverage during the initial underwriting process. This type of receipt is rarely used.
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|
||||
| show | used most often with prop & casualty ins. c binding recpt, coverage begins immed, for a length of time, until the policy is issued. they stipulate that coverage is effect. from the date of the app for only a specified period of time, such as 30 or 60 days
🗑
|
||||
| attending physician's statement (APS) | show 🗑
|
||||
| paramedical exam | show 🗑
|
||||
| investigative consumer report | show 🗑
|
||||
| Medical Information Bureau (MIB) | show 🗑
|
||||
| HIV tests | show 🗑
|
||||
| Rules for HIV tests | show 🗑
|
||||
| what are the 3 ratings of insured? | show 🗑
|
||||
| when can a corporation and banks have a life ins license? | show 🗑
|
||||
| show | A nonresident of Texas may be licensed as a life insurance agent if he or she meets the Texas licensing requirements, as long as the person's home state gives Texas residents the same privilege.
🗑
|
||||
| when can the written part of the life exam be waived for states you don't live in? | show 🗑
|
||||
| show | if not have life license, you can use this license for endowment and annuity benefits, death and dismemb or disability, industrial life with weekly prem, fixed variable annuity, life ins for any one life over 15k with set prem, any other as req by commiss
🗑
|
||||
| show | true
🗑
|
||||
| life ins counselor | show 🗑
|
||||
| How often do you have to renew your life ins license | show 🗑
|
||||
| show | you must retake exam
🗑
|
||||
| how do you know your license is about to expire? | show 🗑
|
||||
| show | appl has submit app and fee and would like to collect fees on industrial life ins, when insurer is considering a person for an agent, they can sign off and have them temp licensed
🗑
|
||||
| how long do temp license last | show 🗑
|
||||
| t or f temp licensed agents cannot sell ins that replaces annuities or life ins | show 🗑
|
||||
| what must you do to renew your license? | show 🗑
|
||||
| When does renewal conin education not apply? | show 🗑
|
||||
| how must contin ed for renewal be completed? | show 🗑
|
||||
| HOW long do you have to maintain records for continuing education for your renewal? | show 🗑
|
||||
| show | emerg cease and desist order must explain the immed danger to public safety and outline the charges and require that the person to immediately cease and desist for such action. The order must also explain the rights of the person charged with the order
🗑
|
||||
| how long do you have to contest the cease and desist order | show 🗑
|
||||
| show | Surrendering the license will not keep the agent from being penalized.
🗑
|
||||
| show | 5 years
🗑
|
||||
| show | order admin pmt, order licensee to make restitution, any combination of these
🗑
|
||||
| show | break ins code, violates another ins law of this state, violates rule adopted by the state
🗑
|
||||
| show | not greater than $25,000 depending on seriousness of crime, economic harm, hx of prev violations, amt necess to deter future violation, was violation intentional,
🗑
|
||||
| show | appt by gov for 2 year term ending feb 1 of odd years,
🗑
|
||||
| t or f the commiss cannot live with anyone who is a licensed agent | show 🗑
|
||||
| certificate of authority | show 🗑
|
||||
| what are the financial requirements each year for the insurer? | show 🗑
|
||||
| how often does commiss examine insurer records? | show 🗑
|
||||
| defamation | show 🗑
|
||||
| show | any inducement offer in sale of ins that is not in the policy. Rebates include money, reductions in comm, stock, bonds, secur and their divid, favors or advantages in benefits, and personal services. Both the offer and acceptance of a rebate are illegal
🗑
|
||||
| disparagement | show 🗑
|
||||
| if an agent moves to a new state, what must they do? | show 🗑
|
||||
| when must a corp or partnership submit biographic info to TDI | show 🗑
|
||||
| When must co or partnership notify TDI | show 🗑
|
||||
| show | An advertisement may not unfairly disparage competitors and their policies, services or business methods and may not unfairly minimize competing methods of marketing insurance. all insurers must belong to this org Assoc has a board of 9 direc apt by gov
🗑
|
||||
| show | became law on April 25, 1971,established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used
🗑
|
||||
| Consumer Reports | show 🗑
|
||||
| show | similar to consumer rpts in that they also provide information on the consumer's character, reputation, and habits. The primary difference is that the information is obtained through an invest and interviews c assoc, friends and neighbors of the consumer
🗑
|
||||
| show | true
🗑
|
||||
| WHA are the penalties of using info from consumer reports under false pretenses? | show 🗑
|
||||
| show | UP TO $2500
🗑
|
||||
| t or f if ins is declined or modified b/c of info in consumer rpt, consumer must be advised and provided name and address of reporting agency | show 🗑
|
||||
| if consumer challenges info in consumer report and wins what is the obligation of the consumer reporting agency | show 🗑
|
||||
| what is the penalty for falsifying insurance | show 🗑
|
||||
| commissioners term office | show 🗑
|
||||
| max duration of temp license | show 🗑
|
||||
| min requirement for ethics trng | show 🗑
|
||||
| show | 25%
🗑
|
||||
| show | 1 MONTH
🗑
|
||||
| Maximum agent licensing fee | show 🗑
|
||||
| show | $25k
🗑
|
||||
| show | $25k
🗑
|
||||
| Fine for each false and fraudulent act | show 🗑
|
||||
| show | $2500
🗑
|
||||
| show | ART - annual renewable term, policy value remains level but premium increases with age
🗑
|
||||
| show | Term provides a level death benefit and a level premium during the policy term. For example, a $100,000 10-year level term policy will provide a $100,000 death benefit if the insured dies any time during the 10-year period.
🗑
|
||||
| show | level premium and a death benefit that decreases each year over the duration of the policy term.
🗑
|
||||
| show | Decreasing term is primarily used when the amount of needed protection is "time-sensitive", or decreases over time. Decreasing term coverage is commonly purchased to insure the payment of a mortgage or other debts if the insured dies prematurely.
🗑
|
||||
| whole life policy | show 🗑
|
||||
| nonforfeiture value | show 🗑
|
||||
| show | straight life, limited pay and single premium
🗑
|
||||
| show | also referred to as Continuous Premium Whole Life), It charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit. If the insured lives to age 100, the policy endows (matures)
🗑
|
||||
| Limited pay whole life | show 🗑
|
||||
| single premium whole life (SPWL) | show 🗑
|
||||
| show | 1 - 5 years then changed by the insurer but will not go below certain rate stated in the policy
🗑
|
||||
| Single prem whole life have surrender charge how does it work? | show 🗑
|
||||
| indeterminate premium reduction policy | show 🗑
|
||||
| show | One of the purposes of the policy is to provide insureds with insurance coverage at a lower initial premium than would be obtainable from the insurer if the premium could not be changed by the insurer for the life of the policy.
🗑
|
||||
| show | true
🗑
|
||||
| Indeterminate premium written statement must include what? | show 🗑
|
||||
| adjustable life policy | show 🗑
|
||||
| What are the normal options for the insured in an adjustable policy | show 🗑
|
||||
| t or f As a result of this flexibility, the policyowner has the option of converting from term to whole life or vice versa on variable policy | show 🗑
|
||||
| show | allow the policyowners to adjust the premium, the insurance companies may give the policyowner a choice to pay either the minimum premium or the target premium.
🗑
|
||||
| how much is the ins on unversal life guaranteed for? | show 🗑
|
||||
| show | small part of it is deduct for prem exp, bal is alloc into the policy's cash acct. Certain exps are then deducted from cash acct. These expenses (loads) incl mortality costs, sales exp incurred in marketing and distrib and expenses involved in issuing
🗑
|
||||
| what are the two components of universal life? | show 🗑
|
||||
| insurance component of universal life | show 🗑
|
||||
| show | The insurance component of a universal life policy is always annual renewable term insurance.
🗑
|
||||
| what are the two death benefit options with universal life | show 🗑
|
||||
| Option A of Universal life | show 🗑
|
||||
| option B of Universal life | show 🗑
|
||||
| show | usually written for employee-employer groups, but other types of groups are also eligible for coverage. It is usually written as annually renewable term insurance.
🗑
|
||||
| show | evid of insurability usually not reequired, participants (insured) do not recv' a policy nor are they in control of the policy
🗑
|
||||
| certificates of insurance | show 🗑
|
||||
| show | true
🗑
|
||||
| show | the larger the number the less the risk of loss (this applies to group ins)
🗑
|
||||
| show | purpose of group, size of group, turnover of group and finan strength of group
🗑
|
||||
| show | average age of the group and ratio of men to women. mUST BE A MIN NUMBER OF PARTICIPANTS
🗑
|
||||
| ELIG GROUPS | show 🗑
|
||||
| t or f If the master group contract is terminated, every individual who has been on the plan for at least 5 years will be allowed to convert to individual insurance of the same coverage. | show 🗑
|
||||
| credit life ins | show 🗑
|
||||
| show | a level fixed premium investment based product. It is in essence a combination of decreasing term insurance and an investment fund. Under this policy, the amount of the premium is fixed, but face amount of the policy varies over time, face amt not vary
🗑
|
||||
| what makes variable ins flucuate? | show 🗑
|
||||
| show | true
🗑
|
||||
| show | prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.
🗑
|
||||
| representation | show 🗑
|
||||
| distinction between a warranty and a representation | show 🗑
|
||||
| t or f In Texas, all legal actions must not begin more than 2 years after the loss occurred. | show 🗑
|
||||
| how long does the insurer have to pay the death claims? | show 🗑
|
||||
| show | the individual who has all the ownership rights, including the responsibility of paying the policy premiums.
🗑
|
||||
| third party ownership | show 🗑
|
||||
| assignment | show 🗑
|
||||
| show | absolute and collateral
🗑
|
||||
| absolute assignment | show 🗑
|
||||
| show | transfer of partial rights to another person. It is usually done in order to secure a loan or some other transaction. Once the debt or loan is repaid, the assigned rights are returned to the policyowner.
🗑
|
||||
| Modifications | show 🗑
|
||||
| show | allows the owner 10 days from receipt to look over policy and if dissatisfied for any reason, return it for a full refund. The free look period starts when the policyowner receives the policy (policy delivery), not when the insurer issues the policy
🗑
|
||||
| show | can be required when large sum as face value of policy or if owner is older. HIV testing can also be required but requires written consent
🗑
|
||||
| show | Causes of loss, exposures, conditions, etc. listed in the policy which are not covered and with no benefits payable.
🗑
|
||||
| what are the most common life ins exclusions? | show 🗑
|
||||
| show | policies today unlike the past will cover passengers on airplane, however they may deny pilots coverage or charge an extra fee
🗑
|
||||
| hazardous occupat or hobbies | show 🗑
|
||||
| show | status clause and results clause
🗑
|
||||
| status clause | show 🗑
|
||||
| RESULTS CLAUSE | show 🗑
|
||||
| T OR F the policyowner does not have to name a beneficiary in order for the policy to be valid. | show 🗑
|
||||
| show | using a designation such as "my children". Many insurers encourage the insured to name each child specifically and to state the percentage of benefit they are to receive.
🗑
|
||||
| what are the two class desig. that are used when an insured chooses to "group" the beneficiaries? | show 🗑
|
||||
| Per Capita | show 🗑
|
||||
| show | meaning "by the bloodline," distributes the benefits of a beneficiary who died before the insured to that beneficiary's heirs.
🗑
|
||||
| show | if no bene alive or assigned to policy the death benefits go to the estate
🗑
|
||||
| show | must be given to a trustee or guardian for the minor.
🗑
|
||||
| show | The person who establishes the trust (known as the grantor) gives legal title of a property to another (known as the trustee) to be used for the benefit of the trust beneficiary.
🗑
|
||||
| show | false
🗑
|
||||
| Succession | show 🗑
|
||||
| show | has first claim to the policy proceeds following the death of the insured. The policyowner may name more than one primary beneficiary and how the proceeds are to be divided.
🗑
|
||||
| secondary beneficiary (contingent bene0 | show 🗑
|
||||
| show | third in line for the death benefits in the event that both the primary and contingent beneficiaries predecease the insured.
🗑
|
||||
| irrevocable policy beneficiary | show 🗑
|
||||
| revocable beneficiary | show 🗑
|
||||
| common disaster clause | show 🗑
|
||||
| show | TRUE, the intent is to fulfill the wishes of the insured
🗑
|
||||
| show | true
🗑
|
||||
| spendthrift clause | show 🗑
|
||||
| interest only option | show 🗑
|
||||
| fixed period option (period certain) | show 🗑
|
||||
| show | pays a fixed, specified amount in installments until the proceeds (principal and interest) are exhausted. The recipient selects a specified fixed dollar amount to be paid until it is gone.
🗑
|
||||
| show | provides the recipient with an income that he or she cannot outlive. If bene dies soon, they forfeit proceeds, or if live long time they may outlive the policy principal ins may provide an option of some or all of proceeds being paid in event bene dies
🗑
|
||||
| single life option | show 🗑
|
||||
| life income Joint and Survivor | show 🗑
|
||||
| show | This option is commonly selected by the policyowner who wants to protect two beneficiaries, such as elderly parents
🗑
|
||||
| show | Because permanent life insurance policies have cash values, there are certain guarantees that are built into the policy that cannot be forfeited by the policyowner
🗑
|
||||
| t or f nonforfeiture values guarantees (known as nonforfeiture values) are required by state law to be included in the policy. | show 🗑
|
||||
| nonforfeiture values | show 🗑
|
||||
| extended-term | show 🗑
|
||||
| show | policyowner simply surrenders the policy for the current cash value at a time when coverage is no longer needed or affordable. Upon receipt of the cash surrender value, if the cash value exceeds premiums paid, the excess is taxable as ordinary income.
🗑
|
||||
| show | fee charged to the insured when a policy or annuity is surrendered for its cash value.
🗑
|
||||
| extended term | show 🗑
|
||||
| t or f If the policyowner has neglected to select one of these nonforfeiture options, the insurer will automatically implement the extended term option in the event of termination of the original policy. | show 🗑
|
||||
| show | Under this option, the policy cash value is used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy.
🗑
|
||||
| show | is only found in policies that contain cash value.
🗑
|
||||
| show | TRUE
🗑
|
||||
| show | the policy will lapse
🗑
|
||||
| show | 30 days this must be in writing
🗑
|
||||
| show | true
🗑
|
||||
| show | Loan value = cash value - (previous unpaid loans + interest)
🗑
|
||||
| show | special type of loan that prevents the unintentional lapse in policy due to nonpayment of premium
🗑
|
||||
| how long can an insurer defer loan requests | show 🗑
|
||||
| partial w/d or surrender | show 🗑
|
||||
| show | first dividend could be paid as early as the 1st policy anniversary, but participation (dividend distribution) must occur no later than the end of the 3rd policy year. From then on the dividends are usually paid on an annual basis
🗑
|
||||
| show | higher premium is charged as a safety margin in the event the insurer’s experience is higher than anticipated. This is the reason for dividends.
🗑
|
||||
| Paid-up Additions | show 🗑
|
||||
| show | insurer usually first accumulates the dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early.
🗑
|
||||
| disability riders | show 🗑
|
||||
| show | serves to waive the premium for the policy if the insured becomes totally disabled.
🗑
|
||||
| t or f If the insured is still disabled after this waiting period, the insurer will refund the premium paid by the insured from the start of the disability. | show 🗑
|
||||
| How long will waiver of premium rider last | show 🗑
|
||||
| waiver of cost insurance rider | show 🗑
|
||||
| show | in event of disabil, insurer will waive policy prem and pay a mo. income to insured. This rider has all the same characteristics of the waiver of premium rider with the addition of paying a weekly or monthly income benefit to the insured while disabled
🗑
|
||||
| show | The amount paid is normally based on a percentage of the face amount of the policy to which it is attached.
🗑
|
||||
| spouse term rider | show 🗑
|
||||
| show | allows child to be added to coverage for limited time for an amount. coverage is term insurance and usually expires when the minor reaches a certain age (18 or 21). Most provide the minor with the option of converting to a permanent policy at that time
🗑
|
||||
| t of f newborn children are automatically covered by the life policy after certain number of days | show 🗑
|
||||
| t or f Upon reaching the maximum age for dependent coverage, children are permitted to convert their coverage to permanent insurance without evidence of insurability. | show 🗑
|
||||
| show | incorporates the spouse term rider along with the children’s term rider in a single rider. When added to a whole life policy, the family term rider provides level term life insurance benefits covering the spouse and all of the children in the family.
🗑
|
||||
| show | accidental death rider, guaranteed insurability rider, cost of living rider, return of premium rider,
🗑
|
||||
| accidental death rider | show 🗑
|
||||
| show | two or three times the face amount of a life policy. (accidental death rider)
🗑
|
||||
| guaranteed insurability | show 🗑
|
||||
| show | addresses inflation by automat increasing the amount of insurance without evidence of insurability from the insured. The face value of the policy may be increased by a cost of living factor, tied to an inflation index such as the Consum Price Index (CPI)
🗑
|
||||
| return of premium rider | show 🗑
|
||||
| show | early pmt of portion of death benefit if term ill, med condit that extraord condit like organ transpl, med condit that w/o tx limits insureds time, inabilty to perform activ of daily liv (ADL), perm instit or long term care, any condit approved by commiss
🗑
|
||||
| show | usually specified as a percentage of the face amount of insurance, usually 50%, but it is legal for the insurer to pay up to 100% of the death benefits before the insured dies.
🗑
|
||||
| show | provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years.
🗑
|
||||
| long term care coverage | show 🗑
|
||||
| show | This is not a taxable benefit since it is used to pay medical benefits or long term care due to catastrophic or terminal illness.
🗑
|
||||
| How much will bene recv if insured uses accelerated living benefit rider for medical exp? | show 🗑
|
||||
| show | FIFO applies to Life insurance only. Annuities follow a LIFO (last in, first out) format
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
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