2-15 lesson

Explain a decreasing term policy

A decreasing term policy is designed so that the face value of the policy decreases over time. An example of when this would be used is protecting a spouse from losing their home if the husband prematurely dies. as the amortization schedule of the mortgage continues the policy face value could be designed to just cover the remaining balance.

What is loading?

Amount added to net premiums to cover the company's operating expenses and contingencies.

In a{n} ___________ term policy, the face value slowly declines in scheduled steps from the date the policy comes into force to the date the policy expires, while premiums remain the same

Decreasing

The __________ provision states that the application and policy contain all provisions and constitute the whole agreement.

Entire Contract

A new suicide exclusion goes into effect when a policy is reinstated. T or F

False

Building cash value does not apply if a term policy is converted to a whole life policy. T or F

False

The provision whereby policyholders have a stipulated amount of days to examine their newly proposed policies at no obligation is the __________ provision.

Free Look

To endow means to

Furnish with an income.

The _________ provision provides that for certain reasons the company may void a policy after it has been in force, typically limited to one or two years after issue.

Incontestable

Most new life insurance policies are purchased by ___________ from life insurance agents.

Individuals

Endowment policies can be compared to _________ term insurance

Level

In a{n} ___________ term policy the face value remains unchanged from the date the policy comes into force to the date the policy expires.

Level

Term life policy premiums are based on :

Mortality and Loading

Term life insurance premiums are based on___________ and ___________

Mortality and loading

The ______________ allows the policyowner to regenerate the policy without the insured having to provide proof of insurability. The _____________ allows the policyowner the choice of changing a term policy into a whole life policy at renewal without providing evidence of insurablility.

Option to renew, Option to convert

What is industrial life insurance?

Sold by home service insurers, the face value of these polices are relatively small and provide modest benefits in a relatively short period. Usually used to pay for the costs of a funeral.

What is the drawback of term insurance?

Term life insurance policies have do not have an extra saving features like permanent life policy's cash value.

Explain an increasing term policy

The face value of the insurance actually increases as time goes on, it is typically used to hedge against inflation. Their is no medical underwriting at renewal as well.

What is mortality?

The relative incidence of death within a group.

A main reason for purchasing industrial life insurance is to:

cover funeral expenses

The ___________ provision exempts the insured from paying premiums after becoming disabled for a specific period of time.

wavier of premiums

Can term life insureds take out a loan using the death benefit on their term life insurance as collateral for the loan?

yes, but as with permanent insurance the death benefit will be decreased until the loan plus interest is paid.

What is term insurance?

Term insurance is meant to provide protection for a preset period of time. It pays benefits only if the insured dies during the designated period of time, and is sometime referred to as temporary life insurance.

For life insurance policies for which the premiums are paid monthly, the grace period is

no less than 30 days

Florida law restricts an insurance company from charging a fixed interest rate higher than _____ annually

10%

Florida law restricts an insurance company from charging a fixed rate higher than _____ annually on policy loans

10%

Whole life policies typically mature at age ______.

100

The free look provision for life insurance policy is _____ days from the policy's delivery

14

The incontestability clause is usually _______

2 years

Florida law requires an additional lapse notice to be sent for individual life contracts that have been in force for at least one year and that cover persons

64 years or older

Under the accelerated death benefits provision, usually up to ______of the policy's face value can be withdrawn

75%

Explain the :"step method" of term insurance.

After a term policy expires the insured can renew at a higher premium.

There are no cash values in endowment insurance. T or F

False

Using riders to decrease coverage will typically increase premium payments. T or F

False

The period of time after the due date of a premium has passed during which the policy remains in force without penalty is the __________ provision.

Grace Period

Explain "level term policies"

Level policies for term insurance is designed so after the policy expires the insured can renew the policy at the previous premium level, but the premiums are higher from the beginning as to the same term coverage using the step method.

___________ life insurance is the most common. ___________ life insurance provides small face values, and ___________ life insurance affords coverage for specific groups.

Ordinary, Industrial, Group

The cost of living adjustment (COLA) rider is based on:

The Consumer Price Index (CPI)

Decreasing term policies fluctuate in face value. T or F

True

If a policy is transferred under an absolute assignment, the assignee cannot change the beneficiary if the beneficiary had originally been designated as irrevocable without the beneficiary's permission. T or F

True

Level term policies do not fluctuate in face value. T or F

True

Most term insurance policies contain the option to renew and/or the option to convert. T or F

True

Ordinary insurance is in the permanent life insurance category and accumulates cash value. T or F

True

The death benefit of an increasing policy increases with time. T or F

True

The delayed payment provision allows an insurer to postpone payment of a policy's cash surrender value for a period of six months. T or F

True

The option to renew is the most popular on policies that are renewable on an annual basis. T or F

True

There are no cash values in term insurance. T or F

True

When the death benefit escalates periodically over the policy's term, it is an ________ term contract.

Increasing

Only participating policies pay dividends. T or F

True

The suicide provision typically stipulates a ______ period of time in which the policy's death benefit will not be paid if the insured commits suicide

two year

In an endowment policy, if the insured is still living at the end of the endowment period, the _________ is entitled to receive the policy benefits.

Policyowner

The ___________ provision puts a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums required.

reinstatement