Life Insurance Exam

Some of the characteristics for a GROUP LIFE underwriter include:

-Purpose of the group -Size of the group -Turnover of the group -Financial strength of the group

Common Versions of limited-pay life are 1.) _____ where coverage is completely paid for in 20 years, and 2.)______where the coverage is completely paid up for by the insured's age 65.

1. 20-pay life 2. Life Paid-up at 65 (LP-65)

Steps of the application process:

1. Completing the form itself, such as the 'General Information' and 'Medical Info' 2. Collecting the Premium 3. Delivering the Policy

Transferrin ALL RIGHTS of ownership to another person or entity, is permanent and TOTAL transfer of all the policy rights. New policy owner does not need to have an insurable interest in the insured

ABSOLUTE Assignment

Do not pay a face amount upon death. The payments stop upon death.

ANNUITIES

A contract that provides income for a specified period of years, or for life. It protexts a person against ouliving his or her money. THEY ARE NOT LIFE INSURANCE, rather a vehicle for the accumilation of money and liquidation of an estate.

ANNUITY

The person who receives benefits or payments from the annuity.

Annuitant

Transfer of rights of policy ownership (does not change the insured or amount, only changes the policy ownership)

Assignment

True statement for both the Fixed-Period and Fixed-Amount Settlement options =

Both gaurantee that the principal AND interest will be fully paid out

Transfer of PARTIAL RIGHTS to another person, don to secure a lone or other transaction, partial and temporary assignments of the rights. Once the debt is repaid the rights are returned to policyowner

COLLATERAL Assignment

Examples of Notforfeiture options:

Cash Surrender value Extended term reduced paid up insurance

Something of value that each party gives to the other

Consideration

A spouse receives a $5,000 a month until the principle and interest on her husbands life insurance policy is paid out. Which settlement option did she choose?

Fixed Amount

Provision that allows the policyowner 10 days from recept (delivery) to look over the policy, if dissatisfied, return it for full refun of premium.

Free look period

If an insured commits suicide THREE years after his life insurance policy is issued, what will the insurer pay to the beneficiary?

Full death benefit, since it is 2 years or more.

Issued to the sponsoring organization, covering the lives of more than one individual member of that group. Is usually written for employee-employer groups, usually annually renewable term insurance, and has two features: insurability not required, particpants do not receive a policy bc they no not own it.

GROUP LIFE

A life insurance policy clause that prevents an insurance company from DENYING payment of a death claim AFTER a specified period of time

Incontestability clause

Type of whole life insurance, designed so that premiums for coverage will be completely paid-up well before age 100.

LIMITED-PAY LIFE

Solicitation of insurance

Means an attempt to persuadeto buy an insurance policy, can be done orally or in writing.

Offers insurers ways to invest or distribute a sum of money available in a life policy

OPTIONS

The ___ of the annuity has all of the rights, such as naming beneficiary and surrendering the annuity. Can be a coportation, trust, or other legal entity.

OWNER

The death benefit remains LEVEL while the cash value gradually increases, lowering the pure insurance with the insurer in later years.

Option A (Level Death Benefit Option)

Universal Life offers one of two death benefit options to the policyowner:

Option A - level death benefit option Option B - increasing death benefit option

The death benefit includes the annual INCREASE in cash value so that the death benefit gradually INCREASES each year by the amount that the cash value INCREASES. *Expenses of this option are much greater, thereby causing the vash value to be lower in older years.*

Option B (Increasing Death Benefit Option)

Define the characteristics of an insurance contract and are fairly universal from one policy to the next

PROVISIONS

When a death claim is submitted it is discovered that the insured understated her ae on the app. What action will the insurer take?

Pay a reduced death benefit based on the insureds actual age

Applicant or Proposed Insured

Person applying for insurance

Whole Life Insurance

Provides lifetime protection and includes a savings element. These policies nedow at the insured's age 100, meaning the cash value created by the accumulation of premium is scheduled to equal the face amount of the policy at age 100.

Agents report

Provides the agent's personal observations concerning the proposed insured. It is not a part of the entire contract, but part of the app process.

Added to a policy to modify provisions that already exist

RIDERS

Risk classification

Rated in three classifications to determine if the applicant is acceptable and to see if the applicant should pay a higher or lowe premium. these three classifications are - standard, substandard, and preferred.

The insurer pays 1,200 annually for her life insurance premium. This year, she has accumulated $175 worth of dividends, she applies to her next premium, thus reducin it, what divident option has the insured chosen?

Reduction of premium

________ are statements believed to be true to the best of one's knowledge, but they are not gauranteed to be true.

Representations

Due to the element of investment risk, the federal government has declared that variable contracts are securities are are thus regulated by the ____, ______, and _______

SEC FINRA and/or federal bodies

Type of whole life insurance, also referred to as 'Continuous Premium Whole Life', which is the basic whole life policy. The policyowner pays the premium from the time the policy is issued until death or age 100. *Has the LOWEST premium*

STRAIGHT LIFE

Variable life insurance products are dually regulated by the _____ and _____.

State and Federal Government

The three basis forms of whole life insurance are:

Straight Whole Life Limited-pay Whole Life Single Premium Whole Life

Term Insurance

Temporary protection because it only provides coverage for a specific period of time. Also known as pure life insurance. - They provide the greatest amount of coverage for the lowest premium

Privision that Stipulates that the policy and a copy of the application, along with any riders or amendments, constitute the entire contract

The entire contract provision

In a life insurance policy, when must insurable interest exist?

The policyowneer must face the possibility of losing money or something of value in the event of loss. It must exist between the policyowner and the insured at the time of application.

Underwriting

The risk selection and classification process. Involves a careful analysis of the applicants health, occupation, lifestyle, hobbies, to determine the acceptability of applicants insurance to see if they are insurabel, and if so, what premium to charge.

A _____ is an absolutely true statement upon which the validity of the insurance policy depends.

Warranty

MIB

a membership corportation owned by a member of insurance companies, is a nonprofit trade organization, that receives adverse medical info from insurance companies and maintains confidential medical impairment info on individuals.

Estate

a person's net worth

Cash Value

a policy's savings element or living benefit.

suitability

a requirement to determine if an insurance product is appropriate for a customer

Qualified plan

a retirement plan that meets IRS guidelines for receiving favorable tax treatment

Death benefit

amount paid upon the death of the insured in a life insurance policy

Substandard - 'Substandard (High Exposure) Risk

applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits. Also referred to as 'rated' bc they could be issued with the premium rated up, resulting in a higher premium.

Nonforfeiture values

benefits in a life insurance policy that the policyowner cannot lose even if the policy surrendered or lapses.

Insurer (principal)

company who issues an insurance policy

The most common type of receipt is a ______; which says that coverage will be effective either on the date of the app of the date of the medical exam, whichever occurs last.

conditional receipt

Insurance Policy

contract between a policyownder and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Variable life insurance products

contracts in which the cash values accumulate based upon a specific portfolio of stocks

Fixed life insurance products

contracts that offer gauranteed minimum or fixed benefits.

Liquidation of an estate

converting a person's net worth into a cash flow

Life Insurance

coverage on human lives

securities

financial investments for profit and trade (stocks, bonds, options)

Policy maturity

in life policies, the time when the face value is paid out

Agent

individual who has entered into an independent contract or agent agreement with Primerica and is Life Licensed, also known as a rep or producer.

Preferred - 'Preferred Risks'

individuals who meet certain requirements and qualify for lower premiums than the standard risk. Have a superior physical condition, lifestyle, habits.

When the insurer relinquishes control of the policy by mailing it to the policyowner, policy is considered________. However, is is adviseable to obtain a signed delivery receipt.

legally delivered

level term insurance

most common type of temporary protection purchased. Refers to the death benefit that does not change throughout the life of the policy.

Insured

person covered by the insurance policy. This person may or may not be the policy owner.

Beneficiary

person who receives the benefits of an insurance policy

Strandard - 'Standard Risks'

persons who are entitled to insurance protection without extra rating or special restrictions. They are representative of the majority of people at their age and with similair lifestyles. they are the AVERAGE risk.

Lapse

policy termination due to nonpayment of premium

Whenever the agent collects premiyms, the agent should issue a _________; which determines when coverage will be effective.

premium receipt.

Annually renewable term (ART)

purest form of term insurance. The death benefit remains level, and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium rises annually according to age as the probability of death increases.

The agent may also be required to get a ________ from the insured; which must be signed by the insured, and verifies tha tthe insured has not suffered injury or illness since the app date.

statement of good health

Face amount

the amount of benefit stated in the life ins. policy

Premium

the money paid to the insurance company for the insurance policy

Policyowner

the person entitled to exercise the rights and privileges in the policy

Level premium

the premium that does not change throughout the life of a policy

Deferred

witheld or postponed until a specified time or event in the future