Life Insurance Policies

When converting term to whole life it increases the death benefit or changing to a lower premium type of policy will require what ?

proof of insurability

Group Life Insurance

provides life insurance on a group of people in a single master contract

Target Premium

recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime

Agents selling variable life insurance products must be?

registered with FINRA licensed by the state to sell life insurance Have received a securities license

When Judgements or injunctions against the insurance producer for conduct involving fraud, deceit, or misrepresentation or a violation of any insurance or securities law of variable contracts of someone who is qualified to sell variable contract happens what should occur?

report to director

Agents who sell variable contracts might need to register with who?

Securities Division of the Arizona Corporation Commission

What are the basic forms of Whole Life Insurance?

Straight Life (continuous Premium) Limited Payment Single Premium

Which policy is used to offset the liability of the estate tax upon the death of the last insured?

Survivorship life

Level Term Insurance

Term insurance where the face value of policy remains the same from the date the policy is issued until the date the policy expires.

What do flexible premiums policies do?

allow policyowner to pay more or less than the planned premium.

How is group life insurance written?

annually renewable term

the insurance component of a universal life policy is always

annually renewable term insurance

How are premium rate on a joint life policy determined?

averaging the ages of both insured

A business continuation agreement tht determines what will be done with the business in the event tht an owner dies or becomes disabled

buy-sell agreement

How much can a credit life insurance policy pay?

cannot pay more than the balance of the debt

Term insurance has no ___ ___

cash value

The __ __ in adjustable life policy only develops when the premiums paid are more than the cost of the policy.

cash value

Whole life insurance provides (permanent) protection and accumulates what?

cash value

Each insured in group life insurance under the plan is issued what to show they have coverage?

certificate of insurance

In adjustable life the policyowner also has the option of ___ from term to whole life or vice versa

converting

Cash Value

created by the accumulation of premiums is scheduled to equal the face amount of the policy when the insured reaches age 100 and paid out to the policyowner. -credited on a regular basis and have a guaranteed interest rate

What type of insurance involves the creditors may require the debtor to have life insurance; they cannot; by require tht the debtor buys insurance from a specific insurer?

credit life insurance

Who gets the master policy in a credit life policy?

creditor

Level Premium Term

death benefit and premium stays the same. ex: $100,000 10 yr level term policy provides $100k death benefit for during a 10 yr period.

Who gets the certificate of insurance in a credit life policy?

debtor

The amount of coverage __ as the outstanding loan balance __ each year.

decreases; decreases

Is usually convertible, not renewable since the death benefit is $0 at the end of the policy term

decreasing

How is credit life usually written?

decreasing term insurance.

Who approves each variable life policy before it can be delivered or issued for delivery?

director

What does Level mean in level term insurance refers to the death benefit?

does NOT change

Variable life insurance products are __ __ by the State and Federal government.

dually regulated

Which policy's face amount increases annually to keep pace with inflation without needing evidence of insurability?

Indexed Whole Life

What are the two major exceptions of Joint Life?

-premium is based on a joint average age that is between the ages of the insureds -death benefit is paid upon the first death only

What is group eligibility for individuals to enter group life contracts?

-related by marriage, blood, adoption -have a common interest through ownership of a business enterprise, they actively manage. -have insurable interest in each other's lives

Juvenile Life

"jumping juvenile" premium remains level, face amount increases at predetermined age, often 21 written on the life of a minor.

Option A (Level Death Benefit)

- Death benefit remains level while the cash value increases; lowers the pure insurance

Pure Death Protection

- if the insured dies during this term, the policy pays the death benefit to the beneficiary - if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term - there is no cash value or other living benefits

What are the Variable Products?

-Variable Universal Life -Regulation of Variable Products (SEC, FINRA, and Arizona) -Qualifications of Producers for the Sale of Variable Products

What are the two features that distinguish group insurance from individual insurance?

-evidence of insurability is usually not required -Participants under the plan do not receive a policy because they do not own or control the policy

Variable Universal Life

-flexible premium that can be increased, decreased or skipped as long as there is enough value in the policy to fund the death benefit -increasing and decreasing the amount of insurance -cash withdrawals or policy loans

What are the state requirements for variable life insurance policies?

-insurer bears mortality and expense risk -schedule premium policies the insurer provides a minimum death benefit in an amount that equals or exceeds the initial face amount of the policy as long as the insured pays the premiums. -policy must reflect the investment experience of one or more separate accounts that are established and maintained by the insurer. -each variable life insurance policy must be credited with the full amount of the net investment return that is applied to the benefit base -least once a year, the insurer must determine any changes in the variable death benefits of each variable life insurance policy -least once a month, the insurer must determine cash value of each variable life insurance policy.

Annually Renewable Term

-the 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 increases annually according to the attained age, as the probability of death increases.

Unless the directors provides written approval, insurer cannot employ any person in connection with handling of separate account assets who within how many years, was convicted of a felony or misdemeanor offense in embezzlement, fraud conversion or misappropriation of funds?

10 years

What is the age of the insured that the whole life policies endow at [cash value created by the accumulation of premium is scheduled to equal the face amount]

100

If any individual insured is not given notice of the right to an individual policy with ___, the insured will be granted an additional period the exercise the right

15 days

when converting an individual policy , This new period will expire within how many days of the notice?

15 days

What is the most common limited payment

20 - pay life (coverage is paid in 20 years) and LP 65.

What is the contract interest rate in universal life?

3 to 6 %

The employee usually has a period of ___ from the group in order to exercise the conversion option.

31 days after terminating

If the master contract is terminated, every individual who has been on the plan for at least ___ will be allowed to convert to individual permanent insurance of the same coverage.

5 years

Domestic insurer cannot change the investment policy of a separate account without first filling the change with the Director the change will be effective in how many days?

60

What is the maximum limit of days of extension when converting an individual policy?

60 days

Joint Life

A single policy that is designed to insure two or more lives. term or permanent used to insure lives of business partners

Credit Life Insurance

A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor.

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.

What are the flexible premium policies?

Adjustable Life Universal Life Indexed Whole Life

What policy is where the policy holder may also pay additional premiums above and beyond what is required under the permanent form in order to accumulate greater cash value or to shorten the premium paying period?

Adjustable life

Financial strength of the group

Because group insurance is costly to administer, the underwriter should consider whether or not the group has the financial resources to pay the policy premiums, and whether or not it will be able to renew the coverage.

Limited Payment

Designed so that the premiums for coverage will be completely paid up well before age 100 -for people who do not want to continually keep paying a premium and stop

Single Premium

Designed to provide a level death benefit to the insured's age 100 for a one-time, lump sum payment

Joint life =___

First to die

Turnover of the group

From the underwriting perspective, a group should have a steady turnover: younger, lower-risk employees enter the group, and older, higher-risk employees leave.

Conversion to Individual Policy

If a member's coverage is terminated, the member and his dependents may convert their group coverage to individual whole life coverage, without having to show proof of insurability.

Group Underwriting Requirements

If the group is large enough there are no medical questions. based on the group basis not individual. each person needs to fill out an application tht mentions insured and insured's beneficiary

What are the special policies?

Joint Life (first to die) Survivorship Life (second to die) Juvenile Life

What policies are used when there is a need for two or more persons to be protected; however the needs for the insurance is no longer present after the first of the insureds dies

Joint life

Universal Life

Known as "flexible premium whole life," this contract provides coverage on an annual renewable term cost basis while allowing a policy account to grow providing lifetime coverage.

Whole Life Insurance

Life insurance that provides lifetime protection, accrues cash value, and has premiums that remain unchanged during the insured's lifetime.

Which option of death benefit involves a corridor gap, between the cash value and death benefit and is maintained by a percentage tht is published by the IRS?

Option A

What are the two death benefit options in the universal life policy?

Option A - Level Death Benefit Option B - Increasing Death Benefit

Which death benefit option has expenses tht are the highest and causes the cash value to lower in the older years?

Option B

Adjustable Life

Permanent + Term Combines permanent and term life policies allowing changes to face amount (increase or decrease), period payments (increase or decrease), and period of protection

What are the characteristics of Group Plans?

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

Indexed Whole Life

The cash value is dependent upon the performance of the equity index (S&P 500) although there is a guaranteed minimum interest rate.

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.

Re-entry option

The insured, upon the end of a term policy with guaranteed renewable option, may qualify for a discounted premium rate with proof of insurability

Living Benefits

The policyowner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered

Which policy allows the policy holder to skip payments of a premium and the policy itself will not lapse as long as there is enough cash value at the time to cover monthly deductions for cost of insurance?

Universal life

Which policy has the assets in a separate account tht invests in stocks and bonds and other securities and cannot join assets in the general account?

Variable life

Provides life time protection, savings element (cash value) .

Whole life insurance

Who are the type of plan sponsors in a group life insurance policy?

employers, debtor groups, labor unions, credit unions, associations, and other organizations formed for a certain reason.

What is not required when converting from group life to individual life insurance?

evidence of insurability

Which policy features how the policy owner pays the premium is how the premium is invested?

flexible premium policies

Term insurance provides the ___ amount of coverage for the ___ premium

greatest; lowest

Death Benefit

guaranteed and also remains level for life

Premiums for whole life are __ than the term insurance

higher

Individual Certificates

in group life, the insurer must issue to the policyholder these to be delivered to each insured person. -they describe the protection and to whom the benefits are payable and the rights and conditions

What are the two components of Universal life polices?

insurance component cash account

What is level premium in whole life insurance based on?

issue age, it remains the same throughout the life of the policy

What type of policy is used to insure the lives of business partners in the funding of a buy-sell agreement and other business life needs?

joint life

How the face amount (death benefit) changes [three basic term coverages]

level increasing decreasing

What are the key characteristics of whole life insurance?

level premium Death benefit Cash value Living benefits

Variable Life Insurance

life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder

Any person who is selling variable contracts in this state must be licenses as a __ ___ and file evidence of a license as a __ __ or principal with the FINRA.

life insurance producer ; registered representative

permanent life insurance

life insurance that builds cash value and remains in effect for the entire life of the insured (until age 100) as long as the premium is paid

Survivorship Life

like joint but insures two or more lives for a premium that is based on a joint age. pays on the last death used to offset the liability of the estate tax upon the death of the last insured

Which policy has a shorter premium paying period than straight life insurance so annual premium will be higher than straight life?

limited payment

What is given to the sponsor of the group in Group life insurance?

master policy/ contract

What are the two option of premiums in universal life the insured can choose?

minimum premium target premium

Group life insurance covers the lives of ___ ___ ___ __ member of the group.

more than one individual

Level Term Life Insurance

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

If there group is not large enough then what happens?

no medical questions are needed. b/c it is based on the nature of the group and the group's past claims experience

What is the current interest rate in universal life?

not guaranteed in the contract but may be higher because of current market conditions

Who are limited pay policies good for?

people who do not want to be paying premiums beyond a certain point in time

Straight life (continuous premium)

policyowner pays the premium from the time the policy is issued until the insured's death or age 100 (whatever occurs first)

What happens at the end of a level premium term policy (at the end of the 10 year $100k term policy)?

premium will be based on insured's attained age at the time of renewal

When any disciplinary sanction by any national securities exchange, national securities association or federal, state, or territorial agency that has jurisdiction over securities or variable contracts of someone who is qualified to sell variable contract happens what should occur?

report to director

When a suspension or renovation of the insurance producer's license in any other U.S. state or territory of someone who is qualified to sell variable contract happens what should occur?

report to the director

Survivorship life =___

second to die ( last survivor)

What has the federal government declared that variable contract are?

securities regulated by the SEC, FINRA and Arizona

Which policy is completely paid-up after one premium and generates immediate cash?

single premium

What type of policy has the lowest annual premium?

straight life

Minimum Premium

the amount needed to keep the policy in force for the current year -will make the policy perform as an annually renewable term product

An insurer must file a variable life insurance policy and their riders, endorsements, applications, and other related documents with who?

the director

Purpose of the group

the group must be created for a purpose other than to obtain group insurance

Size of the group

the larger the number of people in the group, the more accurate the projections of future loss experience will be

What happens if an insured skips a payment on a universal life policy?

the missing premium may be deducted from the policy's cash value. Policy will NOT lapse

Who is the creditor in a credit life insurance policy?

the owner and the beneficiary

Level Premium

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

Decreasing term coverage is commonly purchased for what reason?

to insure the payment of a mortgage or other debts if the insured dies prematurely

What policies investments do not guarantee a return?

variable universal life

What is the most common type of permanent life insurance?

whole life