Pre-Licensing Chapter 2
Annuity: Annuitization period
1. Payout 2. Annuity 3. Liquidation
The federal Government has capped the interest rate to
10%
Joint life is based on
2 or more lives
Survivorship Life is based on
2 or more lives
Annuity: Deferred payment is?
After a year
When does a whole life policy mature?
Age 100
ART stands for?
Annually Renewable Term
Person receiving money from Annuity =
Annuitant
Annuity income is based on?
Annuitant's age and gender
Premium is based on
Attained age at time of conversion
Person receiving money if something happens to the annuitant
Beneficiary
What are the two components of Universal life?
Cash value and Insurance(always ART)
Single premium whole life is
Completely paid up and generates immediate cash value
Variable life requirements are?
Current Prospectus, no guarantee, Separate account
What is a decreasing terms used for?
DEBT
DECREASING term means
Death Benefit goes down but the premium stays the same
How does ART work
Death benefit remains the same Premium increases annually NO proof needed
Term life insurance is happening to what?
Face amount/Death Benefit
Annuity: How are they invested?
Fixed or Variable
Universal Life is also known as
Flexible premium/adjustable life
whole life DB is
GUARANTEED and remains Level throughout the term
Employers use ART for?
Group Insurance
What does an equity indexed annuity do?
Guarantee's a minimum premium, invested on an aggressive rate, to aim for a higher return.
How are annuities paid out?
Immediate or deferred
Universal Life: Death Benefit option B
Increasing Death Benefit option
Whose risk is it in life insurance
Insurance Companies
Whole life: Cash value has a guaranteed?
Interest rate
Annuity: Fixed means
Interest rate stays the same
Annuity: Flexible means
Interest rate varies
Whole life premium is
LEVEL
Annuity: Licenses needed?
LIFE & SECURITIES!
Universal Life: Death benefit option A
Level Death Benefit option
What three characteristics does variable life have?
Level premiums, Guaranteed minimum death benefit, Cash value is not guaranteed because it is invested in the market
Annuity: Periodic premiums can be
Level, Monthly, or Flexible
Variable Life insurance has what licensing requirements?
Life & Securities
Whole life has:
Living benefits that the policy owner can BORROW against the cash value
Uses of Annuities are?
Lump sum settlement, Retirement Plan, Retirement income, Education funds
What are the two types of premiums for universal life?
Minimum = Keeps the policy in force for the year (ART) Target = recommended amount to keep policy in force for lifetime
Purchased the annuity =
Owner
Annuity: Accumulation period
Pay-in period
CASH VALUE life insurance is also known as
Permanent Protection
LEVEL term means
Premium and Death Benefit stay the same throughout the term
INCREASING Term means
Premium goes up but the death benefit stays the same
What is the policy owner paying for in a Cash Value Life Insurance
Protection and savings
Term life insurance can be
Renewed or Converted
Annuity: Investment is kept??
SEPARATE ACCOUNT!
Annuity: What are the ways to be funded?
Single premium or periodic premium
Equity Index follows?
Standard and Poor's 500
Equity Indexed Annuity is a
Type of fixed annuity
ART is convertible to
Whole life insurance
Annuity: Immediate payment is
Within a year
Variable annuity is?
a hedge against inflation
Universal Life: The cost of insurance must
always be paid
Whole life has cash value that is
an accumulation of premiums
Whole life - the cash value is scheduled to
equal the face amount, at age 100
Joint life is paid upon the
first death
Survivorship life is paid upon
last death
Straight (Ordinary) Life Insurance is
level PREMIUM, purest form of whole life insurance
Term life insurance has
no CASH VALUE
LIMITED Pay insurance is
pays the PREMIUM in a limited time
TERM Life Insurance is
temporary life insurance provided for a specific period of time
SINGLE Premium =
the PREMIUM is paid in a lump sum
The type of Whole Life Insurance is
what is happening to the PREMIUM