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.