life insurance
nonforfieture values
- required by state law to be included in policy. - cannot be altered by policyowner. - table showing nonf for next 20 years must be included.
single premium whole life
1 time lump sum premium payment to provide a level death benefit to maturity of policy. Single premium policies generate immediate cash value due to size of lump sum premium payment.
dividend option, policyowner uses dividends to purchase a term policy for one year is referred to as
1 year term option - dividend is utilized to purchase 1 year term insurance.
licensed producer has
10 days to notify commissioner of change of address, change of phone, etc.
must work how many hours for the Keogh plan to be effective
1000 hours a year
insured owns 50,000 whole life policy. At age 47, insured decides to cancel his poicy and exercise extended term option for cash value, which is currently 200,000. What would be the face amount of the new term policy
50,000 - face of term policy would be same as face amount provided under whole life policy
beneficiary designations
Beneficiaries do not have interest in the policy holder.
insurance covers the life of a debtor in connection with a credit transaction
Credit life insurance - covers life of a debtor in connection with a specific loan or other credit transaction
deductibles for major medical plans
Deductibles paid in : FLAT dollar deductible, PER CAUSE deductible, MAXIMUM annual deductible FM PC
deferred annuity
Deferred annuities grow tax deferred, and are best suitable for accumulating retirement income or funds for children's college education.
Accerlerated Benefit provision would have on benefits paid to beneficiary
It will decrease the benefits paid to beneficiary
limited-pay life policy
Life Paid-up at age 65 Limited Pay Whole Life premiums are all paid by time insured reaches age 65. - policy endows when insured turns 100. It is premium paying period that is limited, not maturity.
limited pay life policy
Life paid up at Age 65 Limited Pay Whole Life premiums are all paid by time insured reaches age 65. The policy endows when insured turns 100. It is period that is limited, not maturity.
Z falls from roof of his house while fixing it and damanages his spinal column enough to render him disabled for a year. His insurance policy carries a Disabililty Income Benefit Rider. Which following benefits will Z receive
Monthly premium waiver and monthly income Disability Income Benefit rider waives policy premiums, just like Waiver of Premium rider. Unlike Waiver of Premium rider, it allows insurer to receive a weekly or monthly income during disability period.
Commerical General Liability policy, .. forms covers losses that occur, start or are discovered during policy period, regardless of date is actually reported by insurer?
Occurrence claims made form provides coverage that occurs after a retroactive date and when a claim is made during policy period.
explains policy owner rights to change beneficiaries, choose options and receive proceeds of a policy
Owner's rights
included in a policy summary
Premium amounts and surrender values
premium be tax dedcutible
Premiums paid on a 30,000 ife insurance group term life insuranc eplan for an employee
An insurer wants to obtain info on an applicant.
Present insured with a Disclosure authorization notice
man purchases $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. It is required policy
Required a premium increase each year
policyowner who is also insured wants to name her husband as beneficiary of her policy, & retain all of rights of ownership. = policyowner should have have her husband as
Revocable beneficiary
investor busy a life policy on an elderly person in order to sell it for a life settlement.
STOLI Policy - Stranger Oriented Life Insurance policies - purchased by people who have no relationship with insured with intention of selling them for life settlements
20 pay whole life policy endow
a limited pay whole life policy would endows for face amount at age 100. = premium is completely paid off in 20 years.
2 types of assignment
absolute collateral
provision in life insurance policy- provides early payment of some portion of face value should insured suffer from terminal illness is =
accelerated benefit provision made in a lump sum or in monthly installments over a specific period of time. this provision is given without an increase in premium
Variable annuities
annuitant assumes risks on investment
full premium was submitted with app for life insurance, and policy was issued 2 weeks later as requested. coverage become effective?
application date
policy owner fails to pay premium on his whole life after grace period passes but policy remains in force
automatic premium loan - added to contracts with cash value at no additional charge. - special type of loan that prevents unintentional lapse of policy due to nonpayment of a premium
Insurance policies ensure that after a loss proceeds will go to
beneficiary = person who receives benefits from ins policy
peril
cause of loss a specific cause of loss insured in a policy.
tax sheltered annuity is a special tax favored retirement plan available to
certain groups of employees only a tax sheltered annuity is a special tax favored retirement plan available only to certain groups of employees (nonprofit, education, other 501c3 organizations, including all employees in public education.)
insuring clause
company's promise to pay
straight life
continuous premium whole life, charges a level annual premium for lifetime of insured and provides a level, guaranteed death benefit. it build cash value. straight life has lowest annual premium among whole life policies.
policy is surrended for its cash value
coverage ends - once cash surrender option is selected, coverage is terminated, and policy cannot be reinstated.
adjustable life policyowner can change
coverage period
credit insurance
covers life of a debtor
face value
death benefit
insurance provision
defines how each policy will pay
mutual insurance company
dividend checks
provisions make a contract complete
entire contract
nonforfeiturue option has highest amount of insurance protection
extended coverage extended term nonforfeitfture option has same face amount as original policy but for a shorter period of time
If beneficiary wants guarantee benefits paid from principal and interst would be paid for a period of 10 yrs before being exhausted, - beneficiary selects
fixed period. - beneficiary would determine how long benefits would be paid. The insurer would determine how much would be paid in each installment.
how frequently a policeowner is required to pay policy premium
frequency that policyowner pays policy premium
extended term as a nonforfeiture option
has highest amount of insurance protection insurer uses policy cash value to convert to term insuirance for same face value amount as former permanent plan
Credit life insurance is issued on decreasing term when debt to creditor is being repaid on an
installment basis
universal policy
insurance & cash account 2 components: an insurance component & cash account - insurance component = is always annually renewable term ins - cash account = accumulates on tax deferred basis each year and earns either the guaranteed contract rate or
whole life insurance provides permanent protection
insurance is covered for life, as long as policy premiums are paid. Premiums & death benefits are both guaranteed, and they will remain level, as long as policy is in force
provision stating insured duty to pay death benefits upon death of insured and to whom benefits will be paid
insuring clause
Equity indexed annuities
invest on aggressive basis in order to yield higher results. they have guaranteed minimum interest rates they are less riskier than variable annuities
Accelerated Benefit provision would have on benefits paid to beneficiary
it will decrease the benefits paid
decreasing term policy
level premium and death benefit that decreases each year of policy. Most commonly used with mortgage
increasing term policy
level premium, as do all policies, but face amount increases every year of policy term
joint life
life policy - least expensive because premiums are based on average age, and death benefit would be paid out at 1st death
If life insurance policy develops cash value faster than a 7 pay whole life contract, it is
modified endowment contract
groups formed when several similary related small companies join forces to create a large pool of people insurance will accept as a group
multiple employer trust formed when several similary or related small companies join forces to create a large pool of people that insures a group. MET purchases a single benefit plan that covers employees of each of companies involved.
insurer accumulates dividends at interest and uses accumulated dividends, plus interest and policy cash value, to pay policy up early
paid up option
utilized when insurer acculumates dividents at interest and then uses accumulated dividends plus interest, and policy cash value to pay up policy early
paid up option - different from paid up additions, in which insured can use dividends to buy additional policies that increase face amount of original policy
not cause a death benefit to increase?
payor benefit rider
whole life build cash value
premium paid by policyowner also does not change during life of policy or during premium payment period
level term life insurance
premiums remain the same thoughout life of policy
fixed period settlement options
principal & interest will be liquidated over selected period of time Under fixed period option (= period certain), specified period of years is selected, & equal installments are paid to recipient
sponsored qualified retirement plan , employer will contribute money whenever a profit is realized
profit sharing plan = employer will contribute monies into an employee's retirement plan when the company shows a profit. The others are all qualitfied plans, but company profit isn't an issue with them (401K, tax-sheltered annuity, HR 10 plan)
employer
receives master plan, employees receive certificate of insurance, NOT individual policies
insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability. which policy provision allow this
reinstatement provision
spouse term rider
rider is usually level term insurance
Under an extended term nonforfeiture option, cash value is converted to
same face amount as in whole life policy - insurer uses policy cash value to convert to term insurance for same face amount as former permanent policy
Equity indexed annuities
seek higher returns are not securities. - invest on relatively aggressive basis for higher returns. Like fixed annuity, equity indexed annuity has guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like S&P 500
determines the length of time that benefits will be received under the Fixed Amount settlement option
size of each installment determines length of time that benefits are received under Fixed Amount settlement option.
tax sheltered annuity
special tax favored retirement plan available only to certain groups of people (educational, religious, public education)
limited pay whole life
specifies a set # years during which policyowner must pay premiums. After premium is paid up, policy remains in force for insureds lifetime. Limited pay policies have higher premiums than straight life policies because premium payment period is condensed.
life insurance policy stipulates beneficiary will receive payment sin specified installments or for a specified number of years, what provision prevents beneficiary from changing or borrowing from planned installments
spendthrift provision - all rights of beneficiary to change time of payment or amount of installments, surrender cash, borrow against, or assign for any purpose, are withdrawn and those parts of the policy that may give the beneficiary such rights are void.
nonqualified retirement plan
split dollar amount Ex - individual annuities and deferred compensation plans for highly paid executives, split dollar ins Section 162 executive bonus plans.
survivorship
surviving beneficiary will continue receiveing 2/3 of beenfi paid when both were alive
individual who not covered by employer sponsored plan, IRA contributions
tax deductible
term life insurance
temporary protection, for specified period of time. if the insured dies during specified timeframe = policy pays death benefit to beneficiaries. Term policies provide greatest amount of coverage for lowest premiums. It is pure death protection