life
industrial life insurance characteristics
written in small amounts (usually less than $1000 face amount) premiums payable on weekly or monthly basis premiums collected at home of insured policies written as nonmedical (no med exam required)
consumer reports
written or oral info regarding consumers credit, character, reputation or habits collected from employment records, credit reports,
ordinary life insurance characteristics
large face amounts (at least 1000) premiums paid annually, quarterly semiannually or monthly premiums paid direct to insurance comp physical exam can be required
when an insure purchases a life insurance policy, they will have an estate of at ___
leas tthat amount the moment the first premium is paid
purchasing groups
liability exposures
what does permanent life insurance provide
lifetime protection and savings element (or CV)
human life value apprpach includes
loss of breadwinners income
social security benefits are rarely sufficient to allow retire individuals to______
maintain the same standard of living as when they were working and had an income flow
it is unfair trade practice to
make any statement that an insurers policies are guaranteed by the existence of the insurance Guaranty Association
group life insurance is written as a ____
master policy
admitted (authorized) insurer
meet the states financial requirements have COA
what is incorrect about the primary purpose of MEC
must always pass 7 pay test`
do fixed annuities provide protection against inflation
no
is it possible for a whole life policy to include a waiver of cost of insurance rider?
no
utmost good faith
no fraud, misrepresentation or concealment between parties.
mutual company characteristics
owned by the policyowner issue participating policies policy owners are entitles to dividends which are a return in excess premium and therefore nontaxable dividends are not guaranteed
decreasing term policies are commonly used to ??
pay off a loan balance on the death of the insured, so they are most suitable as mortgage protection coverage
consideration on the part of the insured is what
payment of premium
viatical settlement provider
person, other than a viator, that enters into or effectuates a viatical settlement contract
consideration on the part of the insurer is what
promise to pay in the event of a loss
what isn't true of annually renewable term
proof of insurability must be provided at each renewal
NAIC
resolves insurance regulatory problems forming and recommending model legislation and regulations and simplify marketing of insurance
what do viatical settlements allow
someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds when they are most needed, before their death
consideration
something of value that each party gives to the other
what are some personal uses of life insurance policies
survivor protection estate creation cash accumulation liquidity estate conservation debt protection viatical and life settlements
contributions to roth ira are not ____
tax deductible
some or all of the proceeds of a viatical settlement are ____
taxable
what is term life insrance (aka pure life)
temporary life insurance provided for a specific period of time.
what does application of contract of adhesion mean
the holder of the contract has the ultimate power of promise
with adjustable life, the owner can change everything but
the insured
when insured submits payment to the agent, it is the same as submitting a payment to ___
the insurer
when does an offer happen
when the applicant submits the application
under group life insurance, the cost of coverage paid by the employer in excess of ________ is taxed to the _______
$50,000; employee
a viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy forwhat
% of face amount of policy
what are the characteristics of insurable risk
1) due to chance 2) definite and measurable 3) statistically predictable 4) not CAT 5) large loss exposure and randomly selected
if any fraud activity jeopardized the accompanied insurer the punishment can be up to ____
15 years
within how many years are viatical settlements not allowed after issuance of a life insurance policy
2 years
members of group life insurance receive ____
a certificate of insurance
what does a viatical settlement purchase no include
a licensee an accredited investor or qualified institutional buyer a financing entity a special purpose entity a related provider trust
what does a viator not include
a licensee an accredited investor or qualified institutional buyer a financing entity a special purpose entity a related provider trust
elements of a legal contract
agreement -- offer and acceptance consideration competent parties legal purpose
once a life insurance policy has been issued, the insurer must pay the policy benefit whether or not _____
an insurable interest exists
life settlements
any financial transaction in which the owner of a life insurance policy sells a policy that is no longer needed to a third party for some form of compensation, usually cash
the key employee is the insured and the business is ____
applicant policyowner premium payer beneficiary
what is the cost of coverage based on for group life insurance
average age and ratio of women to men
estate conservation
can be used to ppay inheritance taxes and federal estate taxes so that its not necessary for the beneficiaries to sell off the assets
alien insurer
company incorporated outside US
domestic insurer
company that is incorporated in this state
whole life policy is surrendered for a reduced paid-up policy. the cash value in the new policy will
continue to increase
what type of interest rate is guaranteed in universal life policies
contract interest rate
types of buy sell agreement
cross purchase entity purchase stock purchase stock redemption
terminally ill
illness that can reasonably be expected to result in death in 24 months or less
anyone engaged in insurance fraud that affects interstate commerce and who knowingly makes false material statements may be fined and ______
imprisioned for up to 10 years or both
foreign insurer
incorporated in another state or territory
risk retention groups
insurance organization not typically regulated as a company by state authorities is a risk retention group most often addresses a commercial casualty concern usually hospitals or manufacturing groups of hazardous
ambiguities in a contract are interpreted in favor of the ___
insured
purpose of FCRA is to
protect consumers against circulation of inaccurate or obsolete personal or financial info
estate creation
purchasing life insurance creates an immediate estate
factors in planning income needs
replacing insureds salary or lost services SSI "blackout" period liquidation v retention of capital
fraternal benefit society
sell only to their members are considered charitable institutions not insurers
what are the rating services
AM best Fitch S&P moodys weiss
what do viators usually receive
a percentage of the policys face value from a third party who purchases the policy
viatical settlement purchaser
a person who gives a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy
viatical settlement broker
a person who on behalf of a viator and for a fee, commission, or other valuable consideration, negotiates viatical settlement contracts between a viator and one or more viatical settlement providers
what else can a viatical settlement purchaser mean
a person who owns or acquires or is entitled to a beneficial interest in a trust, that owns a viatical settlement contract or is the beneficiary of a life insurance policy
individual members covered under group insurance must have the right to
convert to individual policy without EOI
what does needs approach look at
costs for post mortem debt cancellation emergency reserve funds education funds retirement fund bequests
what are some reasons the 2 year period for viatical settlements may be waived
divorce death of spouse retirement bankruptcy terminal illness
fair credit reporting act
ensures records are confidential, accurate, relevant and properly used
aleatory contract
exchange of unequal amounts or values
fiduciary
holds trust
stock company characteristics
owned by stockholders provide money to establish and operate insurance companies usually issue nonparticipating policies
viator
owner of a life insurance policy who enters or seeks to enter a viatical settlement policy
what happens in life settlements
the policyowner (seller) could have a life expectancy of more than on year then PO can choose to sell their policies because they feel they no longer need their coverage, or the premium costs have grown too high
who does the broker represent in a viatical settlement
the viator
liquidity
this means policy's cash values can be borrowed against at any time and used for immediate needs
mortgage protection term life
type of decreasing term insurance in which the face amount directly correlates with the amount of outstanding loan and length of time remaining on a mortgage
chronically ill
unable to perform at least two activities of daily living
considering principles of liquidity how would policyowner use todays cash values in a life policy
use it for emergency expenses
stock purchase (buy sell)
used by privately owned corporations when each stockholder buys a policy on each of the others
cross purchase (buy sell agreement)
used in partnerships when each partner buys a policy on the other
stock redemption (buy sell)
used when the corporation buys one policy on each shareholder
entity purchase (buy sell)
used when the partnership buys the policies on the partners
what does human life value approach look at
wages inflation number of years to retirement TVM
when does acceptance take place
when an underwriter approves the application and issues policy
can receipet of proceeds from a viatical adversely affect the recipients eligibility for Medicaid
yes
contract of adhesion
is prepared by insurer and accepted or rejected by insured. offered as take it or leave it basis by an insurer
when a whole life policy is surrendered for its nonforfeiture value, what is the automatic option
extended term
t or f: any knowledge of the agent is NOT presumed to be knowledge of the insurer
false
failure to comply with FCRA
fines up to 2 years prison
self insurers
frequently structure their programs to only retain losses up to a certain specified limit and purchase insurance to cover loss abouve that level. (stop loss coverage)
how are taxation of funds handled with IRA
funds accumulate tax deferred
what is permanent life insruance
general term used to refer to various forms of whole life insurance policies that remain in effect to age 100, as long as premium is paid
human life value approach
gives insured estimate of what would be lost to the family in the event of the premature death of the insured
major difference between private and government insurers
government are funded by taxes private are funded by premiums
what are the two ways to determine the amount of personal life insurance
human life value approach needs approach
in life insurance interest must exist between between the policyowner and the _______ at the time of the _____
insured at the time of the application
who does an agent represent
insurer
investigative consumer reports
interviews associated, friends and neighbors of the consumer consumer must be advised within 3 days of report