Life Insurance Flash Cards

Dividends: Can we make promises or returns of investment?

A few type of Riders 1. Guaranteed insurability 2. Waiver of premium 3. Cost of living 4. Return of Premium 5. Accelerated death benefit 6. Decreasing term rider

Dividends: Can we make promises or returns of investments?

A few type of Riders 1. Guaranteed insurability 2. Waiver of premium 3. Cost of living 4. Return of premium 5. Accelerated death benefit 6. Decreasing term rider

Revocable

1. The person or entity you choose has no legal interest in the death benefit during the insured persons lifetime. The policy owner is in the total control. 2. A person or entity who is designed to receive the assets

What is the free-look period, and when does it begin?

10-30 days from delivery policy - owner can look over policy and return for full refund if dissatisfied

Incontestable clause

2 years, prevents it from denying claim due to incorrect info or concealment of facts

A Limited-Pay Life policy has

20 year paid in full are most common specific time frame in order to pay policy in full before age 100

How many hours of continuing education must an agent complete within 24 months of licensing?

24 hours

Before holding a hearing, the insurance commissioner must give how many days notice prior?

30 days

What percentage of continuing education must be completed in classroom equivalent?

50%

At what age can you begin withdrawals from an IRA without penalty?

59 and a half

Annuities

ANNUITY owner owns annuity, ANNUITANT receives payments.

Policy Riders

Additional benefits, think of it as a way to customize to your specific needs.

What are the special features of insurance contracts?

Aleatory: not an equal exchange of value Adhesion: "take it or leave it" no negotiations Unilateral: It's one sided (also not insured) Personal contract: can't be transferred without consent

Guaranteed Insurability Rider

Allows you to buy more life insurance converge in the future without a life insurance medical exam or Health Questionnaire

An accelerated death benefit Rider

Allows you to receive a part or all of the policy death benefit while you're still alive if you have a terminal illness LIVING BENEFITS

Foreign Insurance Company

An insurance company that is incorporated in another STATE- NOT country!!!!

Fraternal Benefit society

An organization that solicits insurance only among it's members.

Red Flag

Anti-money laundering violation

Single Premium Whole Life

one-time lump sum to pay policy in full-generate cash value immediately because entire premium is paid generates cash quicker.

policy loan prevision

only in policies with cash value can borrow equal to cash value, death benefit reduced by outstanding loan.

Contributory

payments shared between employer and employee and 75% of the employees must participate

Provisions and riders provision

provide and supply something

Entire contract provision

Includes policy, copy of application, and anything included in contract

Insuring Clause

Insurance company agrees to pay death benifit

Lump-sum Cash

Insurer cuts a check for you, TAX FREE

Survivorship insurance

Insures two people and only pays out the death benefit after both have passed away

Survivorship

Joint Life

Increasing Term Insurance

Level Premium - death benefit increases each year

Decreasing Term Insurance

Level premium - Death benefit decreases every year Primarily used when amount of protection needs to decrease overtime (insuring mortage)

Modified premium life

Lower premiums for a short time, then premium increase for reminder of policy.

The Texas Insurance commissioner may issue a temporary license for a a max of how many days?

Max - 180 days Min - 90 days

Fixed Annuity

Minimum interest rate guaranteed, payments do NOT vary, fixed guaranteed payout

What happens to my policy if I get fired or quit my job?

Must contain a conversion provision: Allows employees to convert to individual whole life plan without evidence of insurability. (Amount cannot exceed grouplife coverage amount)

What if my license is revoked ?

Must wait 5 years for a new license

Are your personal life insurance premiums tax deductible?

NO

Variable Annuity

NO guaranteed payout, Subject to market loss and gain, Payments vary, No minimum interest (need security license to sell)

What if I want to cancel my Policy?

NON-FORFEITURE OPTIONS FOR ACCESSING CAHS VALUE ACCUMULATE 1. Cash surrender: take the cash 2. Reduced paid-up: Reduce coverage for remaining length of policy to purchase a paid up whole life policy.

What are the elements of legally binding contracts?

Offer and Acceptance Consideration legal purpose Competent partys

Annuitization

Payout Period (period of time where money that has accumulated is converted into income payments)

Waiver of Premium Rider

Pays your life insurance premiums if you become totally disabled and can't work

Accumulation Period

Period of time where owner makes payment (If annuitant dies during accumulation period, beneficiary receives cash value or total premium paid)

Consideration clause

Policy owner agrees to make payments

Straight whole life insurance

Policy owners pays fixed amount for duration of policy (until age 100) Generates cash slowest

Is employer contribution tax deductible?

Premium paid is tax deductible to employer as a business expense, unless business is named beneficiary or has beneficial interest in policy.

Common Disaster

Primary beneficiary must survive the insured by (30-90 days) or the benefit is automatically paid to the second beneficiary.

Disability Income Rider

Provide monthly income payments if the policy holder is permanently disabled.

Family Income benefits Riders

Provide monthly payments to the beneficiaries if the policy holder dies

Group Life Insurance

Provides coverage to more than one person under the same policy. Usually written for employee-employer groups. Annual renewable during open enrollment term.

Family Maintenance Policy

Provides income for a beneficiary for a specified period after death of the insured. At the end of that period, the insurer gives the beneficiary an amount equivalent to the policy's face value.

Return of premium

Refunds some or all of your premium payments if you outlive your term life insurance policy

Fixed Period

Selection where they would like the insurer to payout the 1 million death benefit. (Ex: you tell the insurer you want them to pay you monthly for 20 years. At the end of the 20 years, the entire million will be gone. )

Clause

Separate stipulation of contract

Contigent

Serves as a backup to the primary beneficiary named on your life insurance

What are the 4 permanent Whole Life Insurances?

Straight Whole Limited Pay Single premium Modified premium life

Standard policy provision

creates uniformity

Suicide Clause

death by suicide in 2 years no death benefit, but premiums are returned

Non-contributory

employer pays the entire premium amount and 100% of the employees must participate

Cost of living

gradually increase the policy holders covarge to align with inflation and the consumer price index premiums will also increase

Reinstatement

if policy lapses, pay back all premiums and outstanding loans to put policy in force

Automatic Premium Loan Provision

added to contracts with cash value at no change - if you miss a payment deduct from cash value.

Life Settlement

an agreement in which a policyholder sells or transfers ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of the policy when insured dies.

Perspires

beneficiary inheritance will be passed on to their next in-line heir or heirs.

Per capita

beneficiary inheritance would be divided evenly amongst any surviving beneficiaries

Beneficiary Types

1. Primary/Secondary 2. Contigent 3. Revocable

Term Special Features

1. Renewal without evidence of insurability new premium is based on attained age 2. Convertible: can convert to whole life based on attained age. Time periods to convert varies depending on contract.

Key Person Insurance

- Key employee is insured - Business is policy owner and receives a death benefit - Helps safeguard a smell business if an imperative employee dies.

What describes term insurance?

1. Affordable 2. EXPIRES 3. No cash value

Types or Riders Continued

1. An accelerated death benefit rider 2. Family income benefits 3. Term Insurance 4. Disability income

Types of Riders & Provisions

1. Guaranteed insurability 2. Waiver of Premium 3. Cost of living

common death settlement options

1. Lump-sum cash 2. Interest only 3. Fixed period 4. Fixed Amount 5. Life Income

How is the rate determined ?

Cost based on average age and ration of men vs, women.

Universal insurance

Can adjust premium and death benefit (flexible premiums, adjustable, cash value growth fluctuates with market interest rates, lower premiums)

Term insurance

Can be added to a whole or universal life policy for additional coverage for a fixed amount of time

Permanent whole life Insurance

Cash value = death benefit at age 100 Includes saving element (cash value) Remain in affect to age 100 is premiums are paid

Can Insurance provide rebates or incentives for purchasing a policy?

Coercion - If someone forces a person to buy insurance. It is considered as an illegal trade practice.

So you're the beneficiary of a policy and the insured dies.. now what?

Common Death settlement options

Level term Insurance

Death benefit does not change throughout policy life Remains same level

Life income

Death benefit is put into an annuity and beneficiary receives payments as long as they live.

Payor Provision

If the payer dies or becomes totally disabled prior to the juveniles reaching 18, the subsequent premiums due are automatically waived.

Fixed Amount

Fixed dollar amount. (Ex: you tell the insurer to send you a check for 10,000 a month. They will do so until money is done.)

Whole Life Insurance

Fixed premiums, Death benefit amount guaranteed, cash value grows at a guaranteed interest late, Higher premiums.

Intrest only

If the company does not hear from the beneficiary, this is the automatic option. The insurance company keeps death benefit and makes interest payments to beneficiary. Under this option, although the underlying death benefit is not taxable, the interest payments that are made ro the beneficiary are taxable as ordinary income.

Extended Term

Use to purchase term policy

Would a client Health questionnaire be a warranty or representation?

Warranty is guaranteed to be true

What is the difference between warranty and representation?

Warranty is guaranteed to be true Representation is believed to be true to ones knowledge

Primary/Secondary

Your primary beneficiary dies before you, a secondary or a contingent beneficiary is the next line.