life insurance

nonforfieture values

- required by state law to be included in policy. - cannot be altered by policyowner. - table showing nonf for next 20 years must be included.

single premium whole life

1 time lump sum premium payment to provide a level death benefit to maturity of policy. Single premium policies generate immediate cash value due to size of lump sum premium payment.

dividend option, policyowner uses dividends to purchase a term policy for one year is referred to as

1 year term option - dividend is utilized to purchase 1 year term insurance.

licensed producer has

10 days to notify commissioner of change of address, change of phone, etc.

must work how many hours for the Keogh plan to be effective

1000 hours a year

insured owns 50,000 whole life policy. At age 47, insured decides to cancel his poicy and exercise extended term option for cash value, which is currently 200,000. What would be the face amount of the new term policy

50,000 - face of term policy would be same as face amount provided under whole life policy

beneficiary designations

Beneficiaries do not have interest in the policy holder.

insurance covers the life of a debtor in connection with a credit transaction

Credit life insurance - covers life of a debtor in connection with a specific loan or other credit transaction

deductibles for major medical plans

Deductibles paid in : FLAT dollar deductible, PER CAUSE deductible, MAXIMUM annual deductible FM PC

deferred annuity

Deferred annuities grow tax deferred, and are best suitable for accumulating retirement income or funds for children's college education.

Accerlerated Benefit provision would have on benefits paid to beneficiary

It will decrease the benefits paid to beneficiary

limited-pay life policy

Life Paid-up at age 65 Limited Pay Whole Life premiums are all paid by time insured reaches age 65. - policy endows when insured turns 100. It is premium paying period that is limited, not maturity.

limited pay life policy

Life paid up at Age 65 Limited Pay Whole Life premiums are all paid by time insured reaches age 65. The policy endows when insured turns 100. It is period that is limited, not maturity.

Z falls from roof of his house while fixing it and damanages his spinal column enough to render him disabled for a year. His insurance policy carries a Disabililty Income Benefit Rider. Which following benefits will Z receive

Monthly premium waiver and monthly income Disability Income Benefit rider waives policy premiums, just like Waiver of Premium rider. Unlike Waiver of Premium rider, it allows insurer to receive a weekly or monthly income during disability period.

Commerical General Liability policy, .. forms covers losses that occur, start or are discovered during policy period, regardless of date is actually reported by insurer?

Occurrence claims made form provides coverage that occurs after a retroactive date and when a claim is made during policy period.

explains policy owner rights to change beneficiaries, choose options and receive proceeds of a policy

Owner's rights

included in a policy summary

Premium amounts and surrender values

premium be tax dedcutible

Premiums paid on a 30,000 ife insurance group term life insuranc eplan for an employee

An insurer wants to obtain info on an applicant.

Present insured with a Disclosure authorization notice

man purchases $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. It is required policy

Required a premium increase each year

policyowner who is also insured wants to name her husband as beneficiary of her policy, & retain all of rights of ownership. = policyowner should have have her husband as

Revocable beneficiary

investor busy a life policy on an elderly person in order to sell it for a life settlement.

STOLI Policy - Stranger Oriented Life Insurance policies - purchased by people who have no relationship with insured with intention of selling them for life settlements

20 pay whole life policy endow

a limited pay whole life policy would endows for face amount at age 100. = premium is completely paid off in 20 years.

2 types of assignment

absolute collateral

provision in life insurance policy- provides early payment of some portion of face value should insured suffer from terminal illness is =

accelerated benefit provision made in a lump sum or in monthly installments over a specific period of time. this provision is given without an increase in premium

Variable annuities

annuitant assumes risks on investment

full premium was submitted with app for life insurance, and policy was issued 2 weeks later as requested. coverage become effective?

application date

policy owner fails to pay premium on his whole life after grace period passes but policy remains in force

automatic premium loan - added to contracts with cash value at no additional charge. - special type of loan that prevents unintentional lapse of policy due to nonpayment of a premium

Insurance policies ensure that after a loss proceeds will go to

beneficiary = person who receives benefits from ins policy

peril

cause of loss a specific cause of loss insured in a policy.

tax sheltered annuity is a special tax favored retirement plan available to

certain groups of employees only a tax sheltered annuity is a special tax favored retirement plan available only to certain groups of employees (nonprofit, education, other 501c3 organizations, including all employees in public education.)

insuring clause

company's promise to pay

straight life

continuous premium whole life, charges a level annual premium for lifetime of insured and provides a level, guaranteed death benefit. it build cash value. straight life has lowest annual premium among whole life policies.

policy is surrended for its cash value

coverage ends - once cash surrender option is selected, coverage is terminated, and policy cannot be reinstated.

adjustable life policyowner can change

coverage period

credit insurance

covers life of a debtor

face value

death benefit

insurance provision

defines how each policy will pay

mutual insurance company

dividend checks

provisions make a contract complete

entire contract

nonforfeiturue option has highest amount of insurance protection

extended coverage extended term nonforfeitfture option has same face amount as original policy but for a shorter period of time

If beneficiary wants guarantee benefits paid from principal and interst would be paid for a period of 10 yrs before being exhausted, - beneficiary selects

fixed period. - beneficiary would determine how long benefits would be paid. The insurer would determine how much would be paid in each installment.

how frequently a policeowner is required to pay policy premium

frequency that policyowner pays policy premium

extended term as a nonforfeiture option

has highest amount of insurance protection insurer uses policy cash value to convert to term insuirance for same face value amount as former permanent plan

Credit life insurance is issued on decreasing term when debt to creditor is being repaid on an

installment basis

universal policy

insurance & cash account 2 components: an insurance component & cash account - insurance component = is always annually renewable term ins - cash account = accumulates on tax deferred basis each year and earns either the guaranteed contract rate or

whole life insurance provides permanent protection

insurance is covered for life, as long as policy premiums are paid. Premiums & death benefits are both guaranteed, and they will remain level, as long as policy is in force

provision stating insured duty to pay death benefits upon death of insured and to whom benefits will be paid

insuring clause

Equity indexed annuities

invest on aggressive basis in order to yield higher results. they have guaranteed minimum interest rates they are less riskier than variable annuities

Accelerated Benefit provision would have on benefits paid to beneficiary

it will decrease the benefits paid

decreasing term policy

level premium and death benefit that decreases each year of policy. Most commonly used with mortgage

increasing term policy

level premium, as do all policies, but face amount increases every year of policy term

joint life

life policy - least expensive because premiums are based on average age, and death benefit would be paid out at 1st death

If life insurance policy develops cash value faster than a 7 pay whole life contract, it is

modified endowment contract

groups formed when several similary related small companies join forces to create a large pool of people insurance will accept as a group

multiple employer trust formed when several similary or related small companies join forces to create a large pool of people that insures a group. MET purchases a single benefit plan that covers employees of each of companies involved.

insurer accumulates dividends at interest and uses accumulated dividends, plus interest and policy cash value, to pay policy up early

paid up option

utilized when insurer acculumates dividents at interest and then uses accumulated dividends plus interest, and policy cash value to pay up policy early

paid up option - different from paid up additions, in which insured can use dividends to buy additional policies that increase face amount of original policy

not cause a death benefit to increase?

payor benefit rider

whole life build cash value

premium paid by policyowner also does not change during life of policy or during premium payment period

level term life insurance

premiums remain the same thoughout life of policy

fixed period settlement options

principal & interest will be liquidated over selected period of time Under fixed period option (= period certain), specified period of years is selected, & equal installments are paid to recipient

sponsored qualified retirement plan , employer will contribute money whenever a profit is realized

profit sharing plan = employer will contribute monies into an employee's retirement plan when the company shows a profit. The others are all qualitfied plans, but company profit isn't an issue with them (401K, tax-sheltered annuity, HR 10 plan)

employer

receives master plan, employees receive certificate of insurance, NOT individual policies

insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allow this

reinstatement provision

spouse term rider

rider is usually level term insurance

Under an extended term nonforfeiture option, cash value is converted to

same face amount as in whole life policy - insurer uses policy cash value to convert to term insurance for same face amount as former permanent policy

Equity indexed annuities

seek higher returns are not securities. - invest on relatively aggressive basis for higher returns. Like fixed annuity, equity indexed annuity has guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like S&P 500

determines the length of time that benefits will be received under the Fixed Amount settlement option

size of each installment determines length of time that benefits are received under Fixed Amount settlement option.

tax sheltered annuity

special tax favored retirement plan available only to certain groups of people (educational, religious, public education)

limited pay whole life

specifies a set # years during which policyowner must pay premiums. After premium is paid up, policy remains in force for insureds lifetime. Limited pay policies have higher premiums than straight life policies because premium payment period is condensed.

life insurance policy stipulates beneficiary will receive payment sin specified installments or for a specified number of years, what provision prevents beneficiary from changing or borrowing from planned installments

spendthrift provision - all rights of beneficiary to change time of payment or amount of installments, surrender cash, borrow against, or assign for any purpose, are withdrawn and those parts of the policy that may give the beneficiary such rights are void.

nonqualified retirement plan

split dollar amount Ex - individual annuities and deferred compensation plans for highly paid executives, split dollar ins Section 162 executive bonus plans.

survivorship

surviving beneficiary will continue receiveing 2/3 of beenfi paid when both were alive

individual who not covered by employer sponsored plan, IRA contributions

tax deductible

term life insurance

temporary protection, for specified period of time. if the insured dies during specified timeframe = policy pays death benefit to beneficiaries. Term policies provide greatest amount of coverage for lowest premiums. It is pure death protection