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1035 Contract Exchange

A tax-free exchange of one annuity contract for another, one life insurance policy for another, or one life insurance policy for an annuity. The contracts do not have to be issued by the same company and no money is allowed to be received

Non Forfeiture Options

Extended term insurance, Reduced-paid up insurance Cash surrender

Fixed Amount Installment Option

Pays a fixed death benefit in specified installment amounts until the principal and interest are exhausted.

Estate Conservation

Purchasing a life insurance policy in order to avoid the forced sale of assets upon death

Reduced death benefit prepayment

What is the primary feature of a viatical settlement?

a MEC can be describes as

a life insurance contract that has accumulated cash values more than the IRS can allow

all life insurance policy summaries typically include

a policy cash value

non forfeiture option In a cash value life insurance policy allows

a policy owner to terminate the policy for a reduced paid-up policy of the same type

life insurance policy guarentees to stated beneficiary in case of death of insured

a specific amount of money

there may be a dollar amount limit on which options maximum benefit

accelerated death benefit option

policyowner dividends usually

accumulate dividends with interest

taxable dividend option

accumulation at interest

What does the Group Life underwriting risk selection process help protect insurance companies from?

adverse selection

a non-contributory health insurance plan helps the insurer avoid

adverse selection

because all eligible employees are usually covered, non-contributory plans are desirable from an underwriting standpoint because

adverse selection is minimized

How does life insurance create an immediate estate?

after the first premium is paid, the face amount of the policy may be available to the beneficiary

under group life insurance, the conversion privilege

allows an employee to convert from group to individual life insurance upon employee termination

The Reduction of Premium Dividend Option

allows policyowner to use the dividend to pay all or part of the next premium due on the policy

Interest Only Settlement Option

allows proceeds to remain with insurer and earnings to be paid to the beneficiary on a monthly basis

Interest Only Settlement Option

allows proceeds to remain with the insurer and earnings to be paid to the beneficiary on a monthly basis is called interest only

interest only settlement option

allows proceeds to remain with the insurer and earnings will be paid to the beneficiary on a monthly basis

A Renewable Term Life insurance policy can be renewed

at a predetermined age or date, regardless of insurers health

An attending physician's statement would be appropriate for which life insurance purpose?

at the request of the insurer when it could affect the underwriting decision, but there needs to be consent of the applicant

Purpose of Social Security

augments a sound personal insurance plan

accelarated death benefit option

before payment of the benefit is made , specific conditions must exist, such as terminal illness

blackout period

begins when the youngest child turns 16 and up until the spouse turns 60.

The tax advantage of life insurance is that:

beneficiary usually will not pay income tax on proceeds

The period in which there are no Social Security benefits for the surviving spouse is called the

blackout period

common disaster clause

can ensure that contingent beneficiary will recieve proceeds if the insured and primary beneficiary die within the same time period or near

acceleraated death benefit allows for

cash advances to be paid against the death benefit IF the insured becomes terminally ill

Under a group life policy, the insurer will issue an individual _____ to the policyowner for delivery to each person insured.

certificate

provision that allows a policyowner to temporarily give up rights to secure a loan is called

collateral assignent

Ownership of a life insurance policy may be temporarily transferred with a(n)

collateral assignment

waiver of premium rider is for those who are

completely and permanently disabled

accelerated death benefit option

considered a living benefit option

association and labor groups have

constitution and bylaws

riders that can increase death benefit amount

cost of living, accidental death rider, guaranteed insurability rider

what happens to coverage to a children term rider when the child reaches a certain age

coverage is eliminated

an insured status under social security can be described as

currently and fully insured

what would not be subject to taxation under MEC

death benefit

With a common disaster provision, a policyowner can be sure that if both the insured and the primary beneficiary die within a short period of time,

death benefits will be paid to contingent beneficiary

liquidity does not

determine insurance premiums

definitions, other insurance, and conditions

elements of insurance policy

a field underwriters main task is to

ensure the accuracy and completeness of an individuals medical information

Level premium permanent insurance accumulates a reserve that will eventually

equal the face amount of the policy

standard whole life policy death benefit would

face amount

accelerated death benefit option

face amount and policy premium are not affected by the payment

cost of living rider if consumer price index has went up 4%

face value of policy may increase 4 %

individual underwriting in group policy true or false

false

similarities of universal and whole life policy

fixed cash value, fixed death benefit, ability to take out a policy loan

settlement options for life insurance policy

fixed period, lump sum, life income

difference between universal and whole life policy

flexible premium schedule

3 elements to variable life insurance policy are

flexible premiums, flexible death benefit, and choice of cash will be invested

a tax free 1035 section exchange of a life insurance policy to a different policy is permitted if it occurs

from insurer to insurer, and the policyowner does not recieve any cash

group life insurance policies are characterized by

group underwriting, master contracts, and probationary period

if there are no eligible children with the surviving spouse when the breadwinner dies the blackout period starts

immediately

incontestable clause applies to

income, marriage status, and address

who is responsible for assembling insurance policy forms for insureds

insurance carriers

accumulation at interest option

invests policy owners money and adds interest earnings to the initial amount of the dividends

life insurance policy written in one contract for two people is payable upon the first death is called

joint

a payor benefit waives the premium in connection to

juvenile insurance

whole life insurance policy where premiums are paid up after 20 years are

limited pay life insurance policy

a permenatnt life insurance policy where the policyowner pays premiums for specified number of years is called a limited pay policy

limited pay policy

what would be subject to taxation under MEC

loan against cash value, policy dividend, policy withdrawal

per capita

method of insurance (life) distribution that ensures all living members are identified in the life insurance policy will receive an equal amount of the life insurance proceeds.

The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid

minus debt, without interest

factors that determine insurance premiums

mortality, expenses, interest

life insurance claim that involves per capita distribution of policy proceeds would be payable to the

named living beneficiaries

extended term insurance is a

nonforfeiture option

accelerated death benefit option riders are

offered with no increase in premium

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)

partial surrender

type of rider that will waive premium if the parent who pays premium of child dies

payor benefit

fixed amount settlement option

pays a fixed death benefit in specified amounts installment amounts until the principal and interest are exhausted

level in term insurance refers to

policy face amount

estate

policy proceeds are obtained in a lump sum and are immediately invested

Reduced Paid-Up Option

policy will have decreased face amount

all of these statements concerning whole life insurance are true

policyowner can take out loan up to face amount, coverage is normally temporary, death benefit is not affected by outstanding loans

adjustable life policy allows change of

premiums and face amount

automatic premium loan provision authorizes insurer to withdraw from a policy cash value the amount of

premiums due if the premium has not been paid by the end of the grace period

Purpose of Social Security

provides basic protection against financial problems accompanying death benefit, disability, and retirment

purpose of social secruity

provides retirement and survivor benefits to the worker and their family

non taxable dividend options

reduction of premium, one year, paid up addition

disability income rider

rider which pays a life insurance policyowner a monthly amount in the event of permanent and complete disability

premium payments for universal life insurance are not used for

separate investment accounts

spendthrift clause

statement in a settlement agreement that indicates the proceeds of a policy will be free from attachment of seizure by the beneficiaries creditors

results exclusion clause

states the insurer is excluded from paying the death benefit only if the death is not a result of war

per capita ensures

that if one of the beneficiaries dies, then the remaining will see their share increased accordingly

converting a group health plan to permanent insurance requires

the conversion being applied for within 31 days of the termination

adverse selection

the tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others

assoication or labor group

they are organized and maintained in good faith for purposes other than obtaining life insurance

viatical settlement contract

transaction that involves an immediate payment to the policyowner prior to the death of the insured

life insurance policy That is subject to a contract interest rate or current annual interest rate is

universal life

pays a death claim in the amount of the death benefit plus the savings element is

universal life

the types of life insurance used to cover key employee indemnification are

universal, whole, term

a secrutites license is required for producer to sell

variable life

3 brothers have first to die joint life policy covering all three of their lives, if someone dies then all policy proceeds

will no longer provide insurance protection

if term life insurance is renewable, the policyowner is purchasing the right to renew the policy

without showing proof of insurability

double indemnity rider benefit will be paid if

you die instantly from a car accident

minimum penalty for obtaining information about a client without having legitimate reasons to do so

10,000

spendthrift clause

A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she receives them.