Life policies

An insured purchased a variable life insurance policy w fave amount of 50k. Over time, stock declined and cash value fell to 10k. If the insured dies, how much will be paid out?

50k bc cash value not guaranteed but cannot be lower than the initial guaranteed benefit amount

For variable products, underlying assets must be kept in

A separate account

Joint life

A single policy that is designed to insure two or more lives. Premium = joint average age Death benefit paid for the first only (spouses or business partners)

Annuity income amount is based on

Amount of premium/cash value; frequency if payment; interest rate and annuitant age and gender

What is annually renewable term insurance?

Annually renewable term (ART) is the purest form of level term insurance in which the death benefit remains level; the policy may be guaranteed renewable each year without proof of insurability, but the premium increases annually according to the attained age.

A universal life insurance policy is best described as

Annually renewable term policy with a cash value acc

What product provide income for a specified period of years and protect a person against outliving their money

Annuity

Permanent life insurance

Build cash value and in effect entire life

Level term life policy can be renewed and convertible

But w higher premium rate

Interest-sensitive whole life

Current assumption life - provides a guaranteed death benefit to age 100

If an annuitant dies before the annuitization occurs, what will the beneficiary receive

Either the amount paid into the plan or cash value, whichever greater

What regulate variable life policies

Fed Gov, SEC, insurance department

Variable universal life

Flexible premium, adjustable death benefits and cash value not guaranteed

Variable whole life insurance is based on what type of premium

Level fixed

Straight Life Annuity

Level premium and guaranteed death benefit

A Straight Life policy

Level premium and guaranteed death benefit Lowest annual prem, develop cash value by end of third policy year

Prem of survivorship is .. than that of joint life

Lower

Pure death protection

No cash value Death benefit if insured died in the term Nothing paid if policy cancelled before insured's death

The death benefit in a variable universal life policy

Not fixed and Depends on the performance of a separate account

Accumulation period

Payments earn interest and grow tax deferred

ART policy

Premium increase each renewal No cash value Level death benefit

Annuity certain

Short term annuity that limits the amounts paid to a specific fixed period or til a specific fixed amount is liquidated

Term Insurance/pure life

Temporary protection because it only provides coverage for a specific period of time. Greatest coverage for lowest premium

If annuitant dies while annuity is still in accumulation stage

The beneficiary will receive the greater of the money paid into annuity or cash value

Who bears all the investment risk in a fixed annuity

The insurance company

What determines cash value of a variable life policy

The performance of the policy portfolio

Annuity period is

The period of time during which accumulated money is converted into income payments

Survivorship Life

Two or more insureds. Pays upon death of the last (lower premium than joint) Used to offset liability of estate tax

Variable annuity - receive dif rates of return on funds paid to annuity

Underlying investment (separate acc), no guarantee interest rate, license required (securities+life)

Which differentiate variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit

cash value

a policy's savings element or living benefit

Nonforfeiture Values

benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

Liquidation of an estate

converting a person's net worth into a cash flow

Death benefit in a variable universal life policy

depends on the performance of a separate account

Level benefit payment amount

the annuitant knows the exact amount of each payment received from the annuity during the annuity period

Indexed life

the cash value is dependent upon the performance of the equity index, such as S&P 500 although there is a guaranteed minimum interest rate

Which life insurance have its cash value depends on company's investments and expense factor?

Interest sensitive whole life

Securities

financial instruments that may trade for value (for example, stocks, bonds, options)

To sell variable life insurance policies, the agent needs

finra, securities and life insurance license

Policy maturity

in life policies, the time when the face value is paid out

Life W/ Guaranteed Minimum

refund life/life contingency. if the annuitant dies before the principal amount has been paid out, remainder of principal mount will be refunded to the beneficiary via cash:installment

Face Amount

the amount of benefit stated in the life insurance policy

endow

the cash value of a whole life policy has reached the contractual face amount

Fixed annuities provide

Equal monthly payments for life, minimum guaranteed rate of interest, future income payments NOT hedge against inflation

An agent selling variable annuities must be registered with

Finra

Variable whole life

Fixed premium. Min death benefit guaranteed but fluctuating cash value Policyowner bears investment risk

Equity indexed annuities

Guaranteed min interest rate Aggressive in nature and not fixed amount of return

Fixed in fixed annuity refers to

Guaranteed rate of interest, equal annuity payments, amount and length of payments

Shorter life expectancy

High benefit in annuities

Equity index annuities

Higher rate than risk Insurer keep percentage of return Guar min interest rate Less risky than variable

Securities

If an agent wishes to sell variable life policies, what license must the agent obtain?

Win a state lottery with check every month - what type of annuity product

Immediate

Attained age

the insured's age at the time the policy is issued or renewed

Level Premium

the premium that does not change throughout the life of a policy

Interest sensitive whole life

type of whole life insurance where the cash value can increase beyond the stated guarantee if economic conditions warrant.

deferred

withheld or postponed until a specified time or event in the future

Two components of universial policy

Insurance and cash account

Which of indexed whole life policy not fixed

Cash value growth (prem, death benefit, policy period fixed)

Annuity

Contract provide income as a vehicle for accumulation if money

The current interest rate on an equity indexed annuity is based on

Standard and Poor 500

What us decreasing term policy best suited for

Debt/loan

Variable products

Insurer invest money in separate acc Min death benefit guaranteed Cash value not guaranteed Policy owner bear investment risk

Fixed annuity

Min rate of interest to purchase payments; income dont vary and guarantee specified dollar amount

What determines cash value of variable life policy

Performance of a policy portfolio