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Section 529 Plans - - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty Roth IRA - private retirement plan that taxes income before it is saved, but which does not tax interest on that income when funds are used upon retirement Distributions don't have to start before 70. 401(k) plan - Elective deferral plan that allows employee to reduce compensation by a stated percentage on a tax deductible/ tax differed basis; often the employer matches the employee contributions Simplified Employee Pension (SEP) - A qualified plan in which a smaller employer contributes specified amounts directly into IRA accounts on behalf of eligible employees 403(b) plan - An elective deferral plan for employees of organizations such as school systems, churches, and hospitals Keogh Plan - Retirement plan for self-employed individual and their qualified employees Rollover - Tax free withdrawal of cash or other assets from one retirement program and its reinvestment in another program. It is not considered income and it is not taxable until a later withdrawal. Has to be completed in 60 days Transfer - When amounts of a qualified plan are transferred to another qualified plan Employee Retirement Income Security Act (ERISA) - Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation profit-sharing plan - a benefit whereby employees may share in the profits of the business Catch-up Contributions - - for those aged 50 or older
- additional $1,000 annually Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch up provisions Rollover time frame - 60 days Keogh Plan - A federally-approved, tax-deferred savings program for self-employed people, allowing them to set money aside for their retirement. Annuity Period - the payout period of an annuity Flexible Premium Annuity - allows the owner to vary the premium payments Deferred Annuity - An annuity that starts sometime in the future. Variable Annuity - Annuity that has a varying rate of return based on the mutual funds in which one has invested Gramm-Leach-Bliley Act - requires financial institutions to ensure the security and confidentiality of customer data Certificate of Insurance (COI) - proof that the insured has insurance Market conduct - refers to the marketing practices of insurers and agents that involve interaction with insureds, claimants, or consumers
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expense loading - the amount needed to pay all expenses, including commissions, general administrative expenses, state premium taxes, acquisition expenses, and an allowance for contingencies and profit Straight Life Annuity - The payout option that will guarantee an annuity payment for the remainder of an individual's life. This option typically provides the largest monthly payment. Refund Life Annuity - Provides annuity payments for the annuitant's lifetime with the guarantee that in no event will total income be less than the purchase price of the contract. If the annuitant dies before receiving this amount, the difference is paid to a named beneficiary either as a cash refund or in installments. convertible term policy - Aleatory Contract - a contract where the values exchanged may not be equal but depend on an uncertain event Insurance Dividends - Considered to be a return of overpaid premiums and is not taxable. You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will change depending on dividend and age
- paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year, the term expires) insurance benefit - Advantage, privilege, right, or financial reimbursement Insurance Considerations - The easiest way to protect yourself and your organization from the legal liability and financial loss associated with environmental safety risks is through insurance. Coverage by insurance allows the facility to transfer the potentially devastating financial risk of a future loss for the cost certainty of a monthly or yearly payment (i.e., premium). Adverse Selection - A high-risk person benefits more from insurance, so is more likely to purchase it. qualified retirement plan - A retirement savings plan approved by the Internal Revenue Service that provides individuals with a tax benefit Unilateral Contract - promise in exchange for an act Elements of a Contract - offer, acceptance, consideration Section 1035 (Policy Exchanges) - Due to the fact that life insurance, annuities and endowments are all similar in nature (though they have their differences), the IRS, under certain circumstances, allows for the exchange of one policy for another without taxation to the individual, as long as funds are not distributed to the individual in the process. limited pay life insurance - A form of whole life insurance characterized by premium payments only being made for a specified or limited number of years. annuity - payment received every year Mutual Insurance Company - A type of insurance company owned by its policyholders.
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NAIC - National Association of Insurance Commissioners current assumption whole life insurance - a nonparticipating whole life policy in which the cash values are based on the insurer's current mortality, investment, and expense experience. Low interest rates increase premiums Replacement Insurance - Insurance that actually replaces an item that has been destroyed. variable contracts - Regulated seperately but in a coordinated fashion between the Department of Insurance, the SEC, NASD HR-10 plan - What is another name for a Keogh plan? Koegh plan - A tax-deferred retirement plan for self-employed people and qualified employees Mutual Insurer - An insurer that is owned by its policyholders and formed as a corporation for the purpose of providing insurance to them. Errors and Omissions Insurance - Insurance which financially protects an architect against claims for damages resulting from professional negligence. Also called professional liability insurance. Insurable Interest - The applicant has more to gain if he lives then if the insured dies Accelerated Benefits - Riders attached to life insurance policies which allow death benefits to be used to cover nursing or convalescent home expenses. Viatical Settlement - the sale of a life insurance policy by a terminally ill insured to another party, typically to investors or investor groups, who hope to profit by the insured's early death Modified Whole Life - Level premiums for designated timeframe (typically 5 years); higher premiums thereafter ERISA (Employee Retirement Income Security Act) - Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation Simple Plans (IRA) - retirement plan often offered to employees of smaller businesses; the business matches funds placed in the retirement fund by the employee up to a certain % of the salary; tax-sheltered, tax deferred, or pre-tax Medical Information Bureau (MIB) - An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes. Joint Life Annuity - payment to two or moer annuitants which ceases upon death of either Joint Life Policy - Covers two or more lives and provides for the payment of the proceeds at the death of the first among those insured, at which time the policy automatically terminates. Tax sheltered annuity - a savings plan where pre-tax money is deposited to earn interest over a period of time. Available to employees of certain non profits Cross-Purchase Buy-Sell Agreement - An arrangement between individuals who agree to purchase the business interest of a deceased owner Variable Universal Life Insurance - A form of universal life insurance that allows the policyholder to make fund choices for the investment component but that has no guaranteed cash value and no guaranteed interest rate. social security disability - Medically determinable physical or mental impairment that can result in blindness, death or last at least 12 months
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Social security primary insurance amount - Equal to workers retirement benefit at full retirement age or disability benefit Accidental death benefits - If a person dies within 90 days of an accident Accidental Death Benefit Rider - A life insurance policy rider providing for payment of an additional benefit when death occurs by accidental means. Decreasing Term Insurance - term insurance in which the annual premium remains constant but the face amount of the policy declines each year Employer qualified retirement plan employees must be - 21 and worked for a year The factors for premium rates - Mortality, Interest earnings, expenses 50 day notice - If an insurer is not renewing the health plan for a small employer Coordination of Benefits (COB) - A clause in an insurance policy that explains how the policy will pay if more than one insurance policy applies to the claim. skilled care - medically necessary care given by a skilled nurse or therapist, Must be available 24 hours a day Intermediate Care - A level of care that is one step down from skilled nursing care; provided under the supervision of physicians or registered nurses. Daily care but not 24 hour care intermediate vs skilled care - Skilled care is 24 hours a day and intermediate is daily but not 24 hour Health Savings Account (HSA) - Tax-sheltered savings account similar to an IRA but created primarily to pay for medical expenses. HSA's Do not include - Medical supplement premiums Rebating - Any inducement offered in the sale of insurance products that is not specified in the policy. Medicare Part A (Hospital Insurance) - covers Medicare inpatient care, including care received while in a hospital, a skilled nursing facility, and, in limited circumstances, at home. Starts November first Franchise Insurance - Life or health insurance plan for covering groups of persons with individual policies uniform in provisions, although perhaps different in benefits. Solicitation usually takes place in an employer's business with the employer's consent. Generally written for groups too small to qualify for regular group coverage. May be called wholesale insurance when the policy is life insurance. Group health insurance Classifications - In group health insurance employees cannot be classified by age Unpaid Premium Provision - If an insured has a claim in the grace period, insurer may subtract overdue premium from the amount of the claim paid Insureds - Individuals who transfer risk to a third party Malingering - characterized by the intentional creation of false or grossly exaggerated physical or psychological symptoms Utmost Good Faith - The fair and equal bargaining by both parties in forming the contract, where the applicant must make full disclosure of risk to the company, and the insurance company must be fair in underwriting the risk. indemnity - a payment for damage or loss Accident and Health Insurance - Insurance against loss through accident or sickness
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Deferred Compensation Plan - A nonqualified retirement plan whereby the employee defers receiving current compensation in favor of a larger payout at retirement (or in the case of disability or death). Recovery time on health insurance policy (legal) - 60 days and 3 years Dread Disease Policy - Provides coverage for specific disease(s), such as cancer or leukemia. Exclusion Ratio - investment in the contract/expected return Self insurance is and example of what kind of risk treatment? - Retention 1035 Exchanges which are contracts funded with existing client asset transfers - Unit Coverage - What every the coverage times by the number of units Policyowner - Person entitled to exercise the rights and priveleges in the policy Death Benefit - Amount paid upon the death of the insured in a life insurance policy Annually Renewable Term - The death protection component of Universal Life Insurance is always.... Annuity owner - The "owner" is the person who purchases the contract and has all of the rights such as naming the beneficiary and surrendering the annuity. The owner, however, does not have to be the one who receives the benefits; it could be the annuitant or the beneficiary. Standard, substandard, and preferred - The 3 risk classifications used by underwriters for life insurance Best detail of underwriting process for life insurance - Selection, classification, and rating of risks Timeframe for filing relevant Suspicious Activity Reports - Within 30 days of INITIAL DISCOVERY Buyer's guide purpose - To allow the consume to compare the costs of different policies The Application - An Insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? Contract of Adhesion - When a persons only options for a contract are on a take it or leave it basis; prepared only by the insurer. Standard risk - Considered to be the average risk; representative of the majority of people in their age and with similar lifestyles Who makes up the Medical Information Bureau? - Insurers (this is so the insurers can compare the info that have collected on the individual) As a field underwriter, a producer is responsible for all of the following tasks.. - Obtain appropriate signatures on the application for insurance, help prevent adverse selection, and solicit business that will fall within the insurer's underwriting guidelines. When an agent collects the initial premium from the applicant, the agent should issue the applicant a... - Premium receipt 3 days - Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? Consideration - Something of value exchanged between the insurer and the insurer is considered.... In forming an insurance contract, when does acceptance usually occur? - When an insurer's underwriter approves coverage and issues a policy
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Contracts of Adhesion - Contracts that are prepared by one party and submitted to the other party on a take it or leave it basis are classified as? Purpose of a conditional receipt - It is intended to provide coverage on a date earlier than the age of the issuance of the policy A prospective insurer receives a conditional receipt, but dies before the policy is issued. The insurer will... - Pay the policy proceeds only if it would have issued the policy Changes to an application may involve drawing a line through the first answer, record the correct answer, and have the applicant initial the change, one may note on the application the reason for the change, and if all else fails one may destroy the application and complete a new one. - If a change needs to be made to the application for insurance, the agent may do all of the following.... Conditional - When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is.. If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about - Whether an insurable interest exists between the individuals Inspection report - An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) Mutual Policy (Example) - An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check fin from the insurer. From what type of insurer did the insured purchase the policy? Within __ days of requesting an investigative consumer report an insurer must notify the consumer in writing that the report will be obtained? - 3 days The earliest a policy may go into effect? - When the application is signed and a check is given to the agent How is it determined whether an insurer is allowed I write business in a state? - The insurer's domicile of location of incorporation will determine whether a company is domestic, foreign, or alien Domestic insurer - Licensed in the state where the individual resides. Foreign insurer - Licensed, however, not in the state the indivisible resides. Alien insurer - Licensed, however, is outside of the U.S. Stock - Insurers who are owned by stockholders who have the usual rights of ownership, including the right of voting? An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? - When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable statement of Good Health Admitted insurer - Synonym for authorized insurer "Illustration" in a life insurance policy refers to - A presentation of non-guaranteed elements of a policy
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When the application is signed and a check is given to the agent. - When is the earliest a policy may go into effect? When the application is given to a prospective insured. - What is not a consideration in a policy? Family health history, alcohol/tobacco consumption, and recent surgeries - Part 2 of the application for life insurance provides questions regarding all of the following.. Be interpreted as if the insurer waived its right to have an answer on the application. - If an insurer issued a policy based on the application that had unanswered questions it would... Respond to the consumer's complaint. - Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must... Legal purpose, offer & acceptance, and consideration - Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements... Prior insurance, credit history, and habits - If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information of the applicant... Applicants present physical condition, present occupation, and past medical history. - In classifying a risk, the Home Office underwriting department will look at all of the following.. Buyer's Guide - A generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. Certificate of Authority - In order for an insurer to legally transact insurance, it must obtain what? The applications - Primary source of insurance underwriting Differentiate between guaranteed and projected amounts, only be used as approved, must identify nonguaranteed values - All of the following are requirements for life insurance illustrations.. Insurable interest - Stranger-originated life insurance (STOLI) policies are in direct opposition to the principle of... If it is intentional and material - When would a misrepresentation on the insurance application be considered fraud? Failure to pay off a loan, tax delinquencies, late payments - According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer: Premium amounts and surrender values - Included in a policy summary Offer & Acceptance, consideration, competent parties, and legal purpose - The four essential elements of all legal contracts: Insurance companies from adverse selection by high risk persons - The Medical Information Bureau (MIB) was created to protect...? Universal Life- allows to have an applicant withdraw a limited amount. - An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of
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the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? Single Premium Whole Life - Requires the entire premium to be paid in one limp sum at the policy's inception. Annuitization Period - In an annuity, the accumulated money is converted into a stream of income during what time period? It is level term insurance - Best description of annually renewable term insurance... The death benefit can be increased by providing evidence of insurability. - The policyowner of an adjustable life policy wants to increase the death benefit. What is the result of this? Straight life Policies - Charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit. Limited pay while life - (Example) your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? When the insured reaches age 100. "A limited-pay whole life policy, just like straight-life, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years." - When would a 20-pay whole life policy endow? The policyowner is entitled to policy loans. - Whole life policies offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans. Immediate - (Example) A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it? Coverage until death or age 100. - What characteristic makes whole life permanent protection? Level, Increasing, & Decreasing - What are the three basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: The period of time during which accumulated money is converted into income payments. - Best description of what an annuity period is: Universal life - Policy which allows the partial withdrawal, or surrender, of the policy cash value Performance or the policy portfolio - The cash value of a variable life policy is not guaranteed and fluctuates with the_________________ in which the premiums have been invested by the insurer. The policy contains sufficient cash value to cover the cost of insurance - The policyowner of a Universal Life Policy may skip paying the premium and the policy will not lapse as long as... Flexible premium - Both Universal Life and Variable Life have a... When the income payments begin - The main difference between immediate and deferred annuities is... Face amount - What does "level" refer to in level term insurance? Level fixed - Variable life insurance is based on what kind of premium? Gradually increases each year by the amount that the cash value increases. - Under Option B the death benefit includes the annual increase in cash value so that the death benefit...
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They must differentiate between guaranteed and projected amounts, they may only be used as approved, and the must identify non guaranteed values - Requirements for life insurance illustrations: 5 days - If a (consumer) requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? To explain features and benefits of a proposed policy to the consumer. - What is the purpose of a disclosure statement in life insurance policies? Consumer reports - What reports include written and/or oral information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources? STOLI policy. - An investor buys a life insurance policy on an elderly person in order to sell it for a life settlement.. what is this an example of? With the policy - If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant... A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company. - What is a material misrepresentation? Face amount - What policy component decreases in decreasing term insurance? To keep the policy in force - What is the purpose of establishing the target premium for a universal life policy? A level annual premium for the life of the insured - A straight life policy has what type of premium? Whole life policy - The policyowner is entitled to policy loans FINRA - An agent selling variable annuities must be registered with.. Universal Life Option A - Universal life option A (Level Death Benefit Option) Policy must maintain a specified "corridor" or gap between the cash value and the death benefit, as require by the IRS. Convertible Term Insurance - Convertible without proof of insurability up to the full term death benefit. Decreasing term - An individual had just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? Insurance and cash account - What are the two components of a universal policy? The policy contains sufficient cash value to cover the cost of insurance. - The policyowner of a Universal Life Policy may skip paying the premium and the policy will not lapse as long as.. Level term - A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? Payments earn interest and and grow tax deferred. - The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. When the insured reaches age 100 - When would a 20-pay whole life policy endow? Convertible term policy - The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a...
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Increasing Term is a type of TERM INSURANCE - There are several types of whole life polices. The first three, Straight life, limited payment, and single premium, are the basic forms of whole life. Lower - All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? Both life insurance and a securities license - What license or licenses are required to sell variable life annuities? Equity Indexed Annuity - An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 index. She would likely purchase a(n)? The annuity period - Time during which accumulated money is converted into an income stream The annuitant is a natural person - The president of a company is starting an annuity and decides that his corporation will be the annuitant. It can happen just as long as.. Straight whole life policies - Have a guaranteed face amount and a level premium for the life of the insured. Deferred - An individual has been making periodic payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? Required a premium increase each renewal. - A man decided to purchase a $100, Annually Renewable Term Life Policy to provide additional protection until his children finished college. He discovered that his policy.. Liquidate an estate. Annuities do not provide death benefits; those are provided by life insurance. - Annuities are most commonly used to fund a persons retirement, but they can technically be used to accumulate cash for any reason. Annuities can also be used to.. The death benefit can be increased by providing evidence of insurability. - The policyowner of an adjustable life policy wants to increase the death benefit. In order to to do that, what may happen? Separate Accounts - A domestic insurer issuing variable contracts must establish one or more.. State and federal government, the insurance department, and the SEC. - Variable life insurance is regulated by..: They do not earn lower interest rates than fixes annuities - Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, EIA's have guaranteed minimum interest rates, also less risky than variable annuities, the insurance company also keeps a percentage of the returns. It has a guaranteed minimum interest rate - Why is an equity Indexed annuity considered to be a fixed annuity? An annuity - Periodic payments of accumulated funds best describes... Premium, death benefit, and policy period - Features of the Indexed whole life policy that are fixed..
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Cash surrender - Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? The policyowner - If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who had the ownership rights? One-year Term option - The dividend option in which the policyowner used dividends to purchase a term policy for one year is referred to as the... If the primary beneficiary predecreases the insured - An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? Accelerated benefits - An insured is diagnosed with cancer and needs help paying for her medical treatment Accumulation at Interest - The annual dividend is retained by the company, the interest is credited at a rate specified by the policy, and the policyholder has the right to withdraw the accumulations at any time Cost of living rider, accidental death rider, and guaranteed insurability rider - All riders that will cause the death benefit to increase? Policy assignment - The policyowner may assign a part of the policy or the entire policy. Suicide is excluded for a specific period of years and covered thereafter - In most states, if death results from suicide within a certain period, the insurer is not obligated to pay the death benefit therefore.. Absolute and Collateral - The two types of assignments are? the amount of earnings lost by the insurance company in interest income - If an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by that amount plus.. Is the premium and statements made in the application, so it will include the information about the amount and frequency of premium payments. - The consideration clause states that the value offered by the insured... Nonforfeiture values - Required by state law to be included in the policy, and cannot be altered by the policyowner. A table showing the nonforfeiture values for the next 20 years must be included in the policy. The insured's estate. - A 40 year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarried and dies at age 61, leaving 2 grown-up children. Assuming he never changed his beneficiary, the policy proceeds will go to... Policyowner - Who can request changes in premium payments, face value, loans, and policy plans? Nonforfeiture options - Cash surrender, extended term, reduced paid-up 0% - If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death? Reduction of premium - The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
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convertible to permanent insurance upon a child reaching insurance upon a child reaching the maximum age without evidence of insurability. - Children's rider are term insurance covering all of the children in the family, including newly born children, and are... The policy will terminate when the cash value is reduced to nothing. - If an insured continually uses the automatic premium loan option to pay the policy premium, Fixed amount - When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option? The balance of the loan will be taken out of the death benefit - If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? The beneficiary will only receive payments of the interest earned on the death benefit. - Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? Paid-up option - An insured had a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? $100,000 - Example: the insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? Consideration - An insured pays an annual premium to his insurer. In return, the insurer promised to pay benefits in accordance with the terms of the contract. This is called.. Reduced paid-up - This nonforfeiture option provides coverage for the longest period of time: Interest only option - The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. What settlement option should the policyowner choose? Lump sum - What is the other term for the cash payment settlement option? The amount and frequency of premium payments - The consideration clause states that the value offered by the insured is the premium and statements made in the application, so it will include the information about.. When death occurs within a specified period of time after the policy was issued - When may an insurance company use suicide as a defense against paying a death claim? The insured's premiums will be waived until she is 21. - A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? Payor benefit rider - This rider will not cause the death benefit to increase Accidental Death Rider - This pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident. Both the principal and interest are liquidated together over the selected period of time - Under the fixed-period option, a specified period of years is selected, and equal installments are paid to the recipient.
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Receive a policy loan, assign the policy, and designate a beneficiary. - The ownership provision entitles the policyowner to do what? Reduced paid-up - Which nonforfeiture option provides coverage for the longest period of time? Face amount of the policy, the beneficiary's life expectancy, and projected interest rates. - The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following: Equal to the original policy for as long as a period of time that the cash values will purchase - When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount.. $50,000 - An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? Level or flexible - Which two terms are associated directly with the premium? $9,800 - An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however; the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? Term rider - May be used to customize a permanent life insurance policy to meet the needs of the policyowner It commences when the policy is delivered - Mandatory free look in a life insurance policy The balance of the loan will be taken out of the death benefit - If a policy had an automatic premium loan provision, what happens if the insured dies before the loan is paid back? Recipient's life expectancy and amount of principal - What determines the amount of each installment paid in a life income option arrangement? That the cash value will not be lost - Nonforfeiture values guarantee which policyowner? Reinstatement provision - Upon policy reinstatement to pay all overdue premiums with interest before the policy is reinstated Policy assignment - The policyowner may assign a part of the policy (collateral assignment) or the entire policy (absolute assignment) The annual dividend is retained by the company, the interest is credited at a rate specified by the policy, the policyholder has the right to withdraw the accumulations at any time. - The accumulation at interest option Must allow the policyowner to return the policy for a full refund - Regarding the free-look provision, the insurance company Newly born children, and are convertible to permanent insurance upon a child reaching the maximum age without evidence of insurability. - Children's rider are term insurance covering all of the children in the family, including: Owner's rights - What explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? Grace period - What required provision protects against unintentional lapse of the policy?
(Section 529 Plans)
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Insuring Clause - What policy component contains the company's promise to pay? Trusts can be valid beneficiaries, the beneficiary may be a natural person, and the policy does not have to have a beneficiary named in order to be valid - What is true about beneficiary designations? Becomes terminally ill - The accelerated benefits provision for an early payment of the death benefit when the insured.. $200,000 - An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? Beneficiary - The person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have to have an insurable interest in the policyholder. The free look provision - Is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid Coverage ends and the policy cannot be reinstated - What happens when a policy is surrendered for its cash value? The balance of the loan will be taken out of the death benefit - If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? Grace period - The automatic premium loan provision is activated at the end of the... Annual - What premium payment mode will incur the lowest overall payment? Common disaster clause - What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? Joint and survivor - The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called? Life income with period certain - Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original dies, the payments will continue to a designated beneficiary? Entire contract - The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the.. Income for 2 or more recipients until they die - Life income joint and survivor settlement option guarantees Pay the death benefit; due to the incontestability clause it 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 - An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed info during the application process. What can they do? Cash option - An insured receives an annual life insurance dividend check. What term best describes this arrangement? Equal to the original policy for as long a period of time that the cash values will purchase - When a life insurance policy is cancelled and the insured has selected the extended term
