EXAM FX CH 2

Viatical Settlement Purchaser

Anyone who gives a lump sum of money as consideration for a lifer insurance policy. A person who owns, acquires, or is entitled to a beneficial interest in a trust that owns viatical settlement contract or is the beneficiary of a life insurance policy which is or will be the subject of a viatical settlement contract.

Needs Approach

Based on the predicted needs of the family after the premature death of the insured, looks at income amount of debt, investments, and ongoing expenses

Preferred Risks

Individuals who meet certain requirements and qualify for lower premiums than the standard risk

Sub-Standard Risks

applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits

Traditional Net Cost Index

compares the cash values available to buyers if they surrender the policy in 10 or 20 years

Interest-Adjusted Net Cost Index

compares the death benefits that are paid at death in 10 or 20 years, if the insured died at that time, and accounts for the time value of money

Variable Life Insurance

contracts in which the cash values accumulate based upon a specific portfolio of stocks with out guarantee of performance

Permanent Life

forms of whole life insurance policies that remain in effect to age 100 as long as the premium is paid

Standard Risks

people who are entitled to insurance protection with out extra raising or special restrictions, representative of the majority of people

Participating Mutual Policy

refers to any policy that distributes its dividends to policy owners by cash payments, reduced premiums, units of paid up insurance, a savings program, or by the purchase of term insurance

Term Life

Life insurance provided for a specific period of time

Fixed Life Insurance

offer guaranteed minimum or fixed benefits that are stated in the contract

Viatical Settlement Broker

A licensed person that negotiates vatical settlement contracts between the viator and viatical settlement providers for a fee

Viatical Settlement Provider

A person who enters into or effectuates a viatical contract. Does not include banks, financial institutions, or the issue of a life insurance policy

Human Life Value Approach

Gives the insured an estimate of what would be lost to the family in the event of premature death of the insured and calculates an individual's life value by looking at the insurred's wages, inflation, the number of years until retirement, and the time value of money

Stock Purchase

used by privately owned corporations when each stockholder buys a policy on each of the others

Cross Purchase

used in partnerships when each partner buys a policy on the other

Stock Redemptions

used when the corporation buys one policy on each shareholder

Entity Purchase

used when the partnership buys the policies on their partners

Group Life Insurance

written as a master policy covering the lives of more than one individual covered under the single policy