Part 3 LIFE INSURANCE class

Which of the following best describes how the insured's money is managed in a variable life insurance policy?

Premiums are placed in investment subaccounts selected by the policy holder. Because under a variable life insurance policy, premiums are placed in investment subaccounts selected by the policy holder.

Dan owns a fixed whole life insurance policy. What type of death benefit is Dan guaranteed?

The policy guarantees a fixed death benefit amount. Because Under a fixed life insurance policy, the insurer guarantees a fixed death benefit.

If the Alpha-Omega Corporation wants to provide cost-effective life insurance for all its full-time employees, it will most likely buy which of the following?

group term life insurance Because Employers typically offer group insurance to their employees. Under group coverage, one policy covers a number of people. The organization that represents the group and sponsors the coverage owns the policy. The insured are not owners of or parties to the contract.

Permanent life insurance can also provide funds, through their cash value, that can be used during the life of the insured. What's that feature called?

living benefits Why Permanent life insurance can provide funds out of its cash value accumulations for use during the insured's lifetime. Thus, this feature is called living benefits.

Bob's insurance goal is to provide additional death benefit protection for his family in the event that he dies while his children are young. What type of life insurance best suits this need?

Term of life insurance Because under a term policy, insurance coverage is temporary and applies only for a limited period of time. At the end of that time, the policy expires. The policy pays a death benefit only if the insured dies during the term.

Kevin tells his insurance agent that he wants a life insurance policy that will last a lifetime, as long as he pays the premiums, maintains a level premium, and generates cash value. This can describe any of the following types of policy EXCEPT:

Term of life insurance Why A term policy is temporary, applying to only a limited period of time. At the end of that time, the policy expires. The policy does not generate a cash value and pays a death benefit only if the insured dies during the term.

Which of the following statements about term life insurance is correct?

The policy pays a death benefit only if the insured dies during the term. Because term life insurance pays a death benefit only if the insured dies during the term.

In a participating life insurance policy, the insurance company pays the policyowner a dividend out of which of the following?

the insurer's divisible surplus Because Insurance companies do pay dividends out of the company's earnings that are available for distribution (the divisible surplus), which are essentially premiums that exceed the insurer's financial obligations in a given year.

Under group insurance coverage, one policy covers a number of people. Who owns these group polices?

the organization that represents the group and which sponsors the coverage Because The organization that represents the group and sponsors the coverage is the policyowner.

Alex has a "home service" life insurance policy, which means he probably pays his premiums in which of the following ways?

weekly or monthly, often personally to the agent who comes to Alex's house Because Also known as industrial insurance, home service insurance policy owners pay weekly or monthly premiums, either by mail, automatic deduction from a bank account, or in person to the agent.

Life and health insurance can be classified as participating or non-participating. This classification determines which of the following?

whether or not the policy distributes the policy dividends to its owner Why The participating/nonparticipating classification determines whether the policy pays its owner a dividend.

All of the following statements regarding the regulation of the sale of variable products are correct EXCEPT:

Agents who only sell variable life products and do not sell fixed life products are not required to have a life insurance license. Because selling variable life products also requires a valid life insurance license.

All of the following statements about participating policies are correct EXCEPT:

Although it is not mandatory to do so, insurers can guarantee their participating policy dividends. Why Participating policy dividends can never be guaranteed.

Example To understand the difference between term life and permanent life, consider the differences between renting a home and owning one: The monthly rent of renting a home is less expensive than the monthly mortgage and taxes of owning a home of the same size.Term life premiums are generally less expensive, when issued, than permanent life premiums. Owning a home usually means a level mortgage payment while rents usually increase over time.Permanent life has a level premium for life, while term life premiums increase with each renewal. Renting a home is generally seen as a temporary step toward owning a home.Many people buy a term policy until they can afford a permanent life policy. Owning a home builds equity (value) while renting a home provides no investment "return."Permanent life insurance builds a cash value that the policyowner fully owns; term life has no cash value. A homeowner may borrow on the home's equity; no such benefit is available to renters.Permanent life policyowners may withdraw or borrow from their cash value.

Ejemplo Para comprender la diferencia entre la vida a término y la vida permanente, considere las diferencias entre alquilar una casa y ser propietario de una: El alquiler mensual de alquilar una casa es menos costoso que la hipoteca mensual y los impuestos de poseer una casa del mismo tamaño.Las primas de vida a término son generalmente menos costosas, cuando se emiten, que las primas de vida permanentes. Ser propietario de una casa generalmente significa un pago hipotecario nivelado, mientras que los alquileres generalmente aumentan con el tiempo.La vida permanente tiene una prima de por vida, mientras que las primas de vida a término aumentan con cada renovación. Alquilar una casa generalmente se ve como un paso temporal para ser propietario de una casa.Muchas personas compran una póliza de plazo hasta que puedan pagar una póliza de vida permanente. Ser propietario de una casa genera equidad (valor) mientras que alquilar una casa no proporciona "retorno" de inversión.El seguro de vida permanente genera un valor en efectivo que el propietario de la póliza posee por completo; la vida a término no tiene valor en efectivo. An owner can borrow the capital of the house; There is no such benefit available to tenants. Permanent life policy owners can withdraw or borrow their cash value.

For your review Group life covers several unrelated people under one main policy; Individual life covers a person. Group insurance participants receive insurance certificates to demonstrate that they are insured. Permanent life has a cash value, lifetime premiums, and a death benefit that generally remains level but can vary by policy type. Term life is temporary cashless coverage, premiums that increase with each renewal, and one death. benefit that can decrease, increase or remain level depending on the type of policy. If the policy owner borrows or withdraws from the cash value of a permanent life insurance policy while the policy is in effect, the death benefit is reduced by the outstanding balance of the loan (plus accrued interest) or the amount withdrawn at the time of the insured's death. Traditional fixed permanent life insurance products can offer long-term guarantees of cash value growth and a death benefit because they are backed by conservative assets in the insurer's general account. Variable insurance contracts, based on separate account investments, can guarantee a minimum death benefit but not the cash value.

For your review Group life covers several unrelated people under one main policy; Individual life covers a person. Group insurance participants receive insurance certificates to demonstrate that they are insured. Permanent life has a cash value, lifetime premiums, and a death benefit that generally remains level but can vary by policy type. Term life is temporary cashless coverage, premiums that increase with each renewal, and a death benefit that may decrease, increase, or be maintained depending on the type of policy. If the policy owner borrows or withdraws from the cash value of a permanent life insurance policy while the policy is in effect, the death benefit is reduced by the outstanding balance of the loan (plus accrued interest) or the amount withdrawn at the time of the insured's death. Traditional fixed permanent life insurance products can offer long-term guarantees of cash value growth and a death benefit because they are backed by conservative assets in the insurer's general account. Variable insurance contracts, based on separate account investments, can guarantee a minimum death benefit but not the cash value.

Which of the following best describes how the insured's money is handled in a variable life insurance policy?

Premiums are placed in investment subaccounts selected by the policyowner. Because Under a variable life insurance policy, premiums are placed in investment subaccounts selected by the policyowner.

Key Point The cash value is an essential part of the death benefit. If the policyowner withdraws or borrows from the cash value, the death benefit is reduced by the withdrawn amount or outstanding loan balance (including accrued interest) at the time of the insured's death.

Punto clave El valor en efectivo es una parte esencial del beneficio por fallecimiento. Si el titular de la póliza retira o toma prestado del valor en efectivo, el beneficio por fallecimiento se reduce por el monto retirado o el saldo pendiente del préstamo (incluidos los intereses acumulados) en el momento de la muerte del asegurado.

When can an insurer cancel term or whole life insurance?

The insurer can cancel both types of policies if the policy owner does not pay the premiums. Because the insurer can cancel any type of life insurance policy if the policy holder does not pay the premiums.

All of the following statements regarding the fixed cash values ​​of total life insurance are correct EXCEPT:

Withdrawing or borrowing the cash value will have no impact on the policy's death benefit. Because if the policyholder withdraws or borrows the cash value while the policy is in effect, the death benefit is reduced by the amount withdrawn or the outstanding balance of the loan (plus accrued interest) at the time of the insured's death.

Which of the following plays a role in regulating sales of variable insurance products?

both FINRA and state insurance departments Because FINRA regulates variable insurance products and sales from an investment perspective, while state insurance departments regulate variable products and sales as insurance products.

Which of the following best describes a policy that has a relatively low nominal amount and has premiums that are paid to an insurance agent who generally calls the policy owner at home to collect them?

industrial life insurance Because industrial, term or lifetime insurance offers individual coverage in small amounts that does not require a medical exam to qualify. Premiums are paid frequently. In general, an insurance agent calls the policyholder at their home weekly or monthly to collect the premium.

Harry and Connie want to buy life insurance that gives them a guaranteed death benefit every time they die, will generate a guaranteed cash value that they can access while they live, and will even return excess premiums to them. Which of the following options best suits the needs of this couple?

participating full life insurance Why

Sylvia's insurer guarantees a fixed death benefit for the policy she owns. Based on this, which of the following benefits is also most guaranteed with this policy?

the cash value of the policy Why