Life Insurance Exam NC

The max benefit one contract holder may receive in benefits regardless of the # of contracts is

$5,000,000

Non contributory group plan

- Helps reduce adverse selection against insurer. - Requires 100% Employee participation - Employer pays 100% of the premiums

Variable Annuities

- Payments fluctuate according to the value of an account invested primarily in common stocks - Must have both life and securities license - Occurs during the annuity/payout period.

Key distinction between variable whole life and variable universal life?

- Variable whole life has a guaranteed DB - Variable universal life has 2 DB: A and B

Licensee accused of misconduct will result in a license suspension of how many years?

1

Modified Life Insurance Policy

1 increase in the premium in the first 3-5 years then is level to age 100

Group life insurance must have how many participants?

10

How many days is the look back period?

10

The amount of days an agent has to notify the Dept. of Insurance about a change in address

10

What happens if you withdrawal $ from an annuity before age 54.5?

10% penalty fee

Any person who violates a cease and desist order of the commissioner pertaining to consumer info may receive a fine up to

10,000

A SIMPLE Plan is offered to companies with less than how many employees?

100

To qualify of Social Security you must be disabled for how many months?

12

Proof of loss forms must be sent to claimants after how many days notice?

15

NC Continuing Education Requires how many credit hours each renewal period?

24

Buyers guide policy must be kept for how many years?

3

After terminating residency you must notify the commissioner within how many days?

30

An insurer terminates an agent's appointment. Within how many days of termination must the commissioner be notified?

30

Group life premium payment grace period is how many days?

31

How many years is a commissioners term?

4

Commissioner examines domestic insurers every

5 years

Commissioner must examine every domestic insurer every

5 years

An insurer may not backdate a policy more than how many months?

6

To remain insured status under Social Security, a worker must have earned

6 credit during the last 13 quarters

For beneficiary to receive DB, death of insured must occur within how many dats after an accident?

90

Universal Life Insurance

A combination of whole life insurance and term life insurance. Flexible premium, adjustable life.

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.

Limited Pay Policy

A permanent life insurance policy where the policyowner pays premiums for a specified number of years. 10 pay life, 20 pay life, paid up at 65

Decreasing Term

A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy.

An example of rebating is

Agent offers tickets to a game to induce buying insurance

Unbundled

All pricing elements are disclosed separately by the insurer

Cost of Living Rider

Allows the policy face amount to be adjusted to account for inflation based on the consumer price index.

Rebating

Any inducement offered in the sale of insurance products that is not specified in the policy. Returning a portion of the premium or agents commission to the insured or buying them things.

Endowment Policy

Builds faster than traditional, expensive (more), raising $ raising the CV

Single Premium Policy

Builds immediate CV because you made a lump sum payment (paid only one premium)

Interest Sensitive Insurance Policy

CV varies dues to performance of the company. Also known as "Current Assumption Life"

Family Policy

Combination of term and whole life policies.

2 Death Benefits for Universal Life Policy are

DB A: Face amount or level only DB B: Both Face amount and CV

Term Life Insurance acronym

DIAL

Limited Benefit Policy

Dread disease policies. Generally, these policies cover illnesses that don't occur frequently, but account for significant costs when they do take place. Cancer policy.

Family members can convert their coverage to perm life without proof of insurability

Family Policy

Provides coverage for family members at the lowest cost.

Family Protection Policy

Agent who embezzles money received from an insured is guilty of a

Felony

3 Interest Rates for Annuities

Guaranteed/Fixed, Variable, Fixed Index Annuity (fixed and variable)

Death Benefit fluctuates during which policies?

Increasing and decreasing term policies.

Who makes up the Medical Information Bureau?

Insurers (this is so the insurers can compare the info that have collected on the individual)

Annual Renewable Term (ART)

Level term policy where the premium goes up every year and the face amount stays the same. Cheapest the 1st year.

The purpose of an Annuity is to

Liquidate an estate

Defamation

Making false statements about the financial condition of an insurer.

Grace Period

Must be at least 30 days in the state of NC. Some companies provide more.

Adjustable Life Insurance Policy acronym

PCP

Joint Life Insurance Policy

Pays the 1st to die. Ex.) Jack dies, the DB goes to Jill.

Survivor Life Insurance Policy

Pays the 2nd to die. Ex.) Jack dies, then Jill dies, the DB goes to the children after Jill (the second insured) passes.

Variable Life Insurance Policy

Permanent life insurance product. Level premium. CV is invested into the market. Often more expensive than others such as term life. Considered securities contracts bc of investment risks.

Whole Life Insurance is

Permanent, builds cash value, level premiums, guaranteed CV.

3 things you can change in an Adjustable Life Insurance Policy

Plan, Coverage Period, Premium Period

Who has ownership rights over a life insurance policy

Policy Owner

Family Protection Policy

Policy that provides protection for all family members. Term insurance for children and spouse. If a child converts to a permanent plan of life insurance, evidence of insurability is not required.

Taxation of premiums in a key-person life insurance policy

Premiums are not tax deductible as a business expense.

Term Life insurance is

Renewable or convertable at the end of the term. Guaranteed insurability regardless of your health. Increased premium based on attained age.

Indemnity provision

Returns/restores an insured to the same financial state as before the loss

Corridor of Insurance (COI)

Save tax advantages, for DB A

Graded Life Insurance Policy

Several increases in the first 5-7 years then it stays level.

Taxation under a SIMPLE Plan

Tax deferred until withdrawn

Term Life Insurance is

Temporary, for a period of time. Has no cash value

Increasing Term

Term life insurance that provides an increasing cash value over time based on specific amounts or a percentage of the original face amount.

Insurer knows a person has violated fraudulent claims or embezzlement. Who do they notify?

The Insurance Commissioner

Face amount is

The death benefit. This is the dollar amount that the beneficiaries will receive upon the death of the insured.

Annuity owner dies while the annuity is in the accumulation/pay in period, what does the beneficiary receive?

The greater of the money paid into the annuity or the CV.

Straight Life Annuity

The payout option that will guarantee an annuity payment for the remainder of an individual's life, regardless of how long they live. This option typically provides the largest monthly payment. No Beneficiaries. Occurs in the annuity/payout period.

Policy Assignment

The transfers rights of ownership from the owner to another person

Whole Life Policy also known as:

Traditional, Straight Life, Pure Life

Whole Life Insurance acronym

WELLS

Payor Benefit Life Insurance Policy

Waives the premium till the child becomes 18 if the payor dies or becomes disabled.

Collateral Assignment

When you use life insurance to secure a loan

Family Income Policy

Whole life + Decreasing term. At death beneficiaries receive a lump sum and a monthly check for the remaining number or years they have on the 20 year ride.

Family Maintenance Policy

Whole life + level term. Always 20 year payment for beneficiaries. At death beneficiaries receive a lump sum and a monthly check.

Juvenile Life Insurance Policy

a life insurance policy written on the life of a minor

Contracts of Adhesion

contract offered by a dominant party to a party with inferior bargaining power on a take-it-or-leave-it basis

For fixed products, underlying assets must be kept in a

general account

A copy of the original application must be made apart of the

insurance policy

Who pays agent's appointment fees?

insurer

Whole Life Policy

level premium to age 100, builds CV after 3-5 years.

Key person life insurance

life insurance that protects a firm against losses due to the death of a key employee.

An Annuity is a

lump sum of money that Insurance companies help stretch over a period of your life. Guarantees you income.

Payor is

parent/guardian or whoever is paying for the policy for the child.

Universal Life Insurance allows

policyowner to skip premium payments as there is enough CV to cover the premium amount.

Level Term

premiums and death benefits stay the same for the life of the policy

Person who sells insurance solely as a foreign military sales agent has a

restricted license

For variable products, underlying assets must be kept in a

separate account

The accumulation/pay in period of an annuity is

tax deferred

The annuity/pay out period of an annuity is

taxable

Target Premium

the amount you pay to keep the policy from lapsing

Life with Period Certain Annuity

the annuity payments are guaranteed for the lifetime of the annuitant and for a specified period of time for the beneficiary. Occurs during the annuity/payout period.

Express Authority

the authority of an agent, stated in the Agent's contract or agreement creating the agency

Viatical Settlement

the sale of a life insurance policy by a terminally ill insured to another party, typically to investors or investor groups, who hope to profit by the insured's early death

Insurable interest must exist in a life insurance policy at

the time of application

Embezzlement

theft or misappropriation of funds placed in one's trust or belonging to one's employer.

Immediate annuity

withdrawals money in less than 12 months. Occurs in the accumulation period.

Deferred Annuity

withdrawals money in over 12 months. Occurs in the accumulation period.