Life Insurance -- Chapter 2

The coverage becomes effective at application approval. If the company doesn't approve the application, coverage was never in effect

Acceptance (Approval) Conditional Receipt

Personal statement submitted by producer regarding the applicant's financial condition and any personal knowledge of the applicant

Agent's Report

If premium is paid, coverage will be in immediately for a specific length of time regardless of whether the applicant is ultimately approved by the insurer. This may also be referred to as temporary insurance agreement

Binding (Unconditional) Reciept

An amount of cash accessible to the plicyowner from within permanent life insurance policies

Cash Accumulation

To help fund favorite charitable organizations upon the insured's death

Charities

If premium is paid, coverage will be in effect the date of application or completion of the medical exam, whichever is later as long as the policy would have been issued as applied for

Conditional Reciept

The act of saving or keeeping the existing policy and preventing it form being replaced

Conservation

Provides money to pay any estate taxes or loans which must be satisfied upon the death of the estate owner (The insured) preserving the insured's estate

Estate Conservation

Life insurance proceeds paid in a lump sum provide financial assets to create immediate estate the insured can pass onto survivors

Estate Creation

The inssurer who issued the policy to be replaced

Existing Insurer

The policy has a fixed amount of coverage, benefits and premium. Without riders, futureinflationary trends wil cause the purchasing power of the policy's benefits to be reduced

Fixed

Part one of the applications includes

General Questions about applicant: Sex/gender marital status residence/DOB occupation past/current insurance

Insurance plan normally owned by an employer, creditor, or association which is supplied to its employees debtors or members

Group Insurance

General report of applicants finances, character, morals, work, hobbies, and other habits (Consumer Investigative Report)

Inspection Report

Immediate funds available upon death to pay creditors, taxes and final expenses as well as cash values available for policy loans, withdrawals, and full surrenders

Liquidity

Premium Payment mode

Mode refers to frequency of payments and higher the amount of payments, the more expensive the premiums

Application used when a policy requested does not require a medical examination for underwriting. only medical questions on application

Nonmedical Application

Polcy marketed by a stock insurer. share of the profits turned back to policyholders and is taxable

Nonparticipating

Any type of life insurance that is not group, industrial or government. Largest portion of life insurance in force today

Ordinary Life Insurance

A class of policy marketed by a mutuallly owned company. Participating means a divident may be paid to the policyowner when declared

Participating

Life insurance policy remains in force until age 100 or beyond. premium is higher than term policy

Permanent

A type of coverage with a small face amount, typically purchased to pay the burial expenses of the insured

Pre-Need Plan

Properly owned and named beneficiaries wil allow for the payment of death benefits directly to the beneficiaries, bypassing the probate process.

Privacy

Both the _______ and the ________ must sign the application.

Producer; applicant

Whenever an anser to a question needs to be corrected the _________ or _________ makes the correction and the __________ initials the change or the producer can create a new application

Producer; applicant; applicant

Any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contracts will be: Lapsed, forfeited, surrounded or terminated reduced in value reissued with a reduced cash value

Replacement

The insurer is responsible for issuing the new policy

Replacing Insurer

Peace of mind knowing that future insurability is not an issue, and benegits will be in place as long as the required premiums are paid

Security

Stranger Orignated Life Insurance (STOLI)

Selling life insurance policies to a third party with no personal or business connection

Levels or risk

Substandard Standard Preferred

Providing funds for surviving spouses and dependents

Survivor Protection

Lowest intial premium outlay designed for someone with large insurance needs and limited cash flow. referred to as temporary.

Term

Policy used for cash value accumulation, license from SEC required to sell this

Variable

A terminally ill insured/owner selling their policy to a third party for less than the death benefit but more than the cash values in order to obtain funds when no other sources are readily available

Viatical Settlements

Part two of application includes

medical questions

MIB (Medical Information Bureau

owned by insurers, collects medical information of applicants