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