Life Insurance Policies (73%)
1. evidence of insurability is usually not required (unless an applicant is enrolling for coverage outside the normal enrollment period) 2. participants (insureds) under the plan do not receive a policy because they do not own or control the policy
2 features that distinguish group insurance from individual insurance are:
buy-sell
A _____ is a business continuation agreement that determines what will be done with the business in the event that an owner dies or becomes disabled
jumping juvenile
A common juvenile policy is known as the ____ policy because the face amount increases at a predetermined age, often 21; but the premium remains level
1. insurance component 2. cash account
A universal life policy has 2 components:
1. be registered with FINRA (financial industry regulatory authority) 2. have a securities license 3. be licensed by the state to sell life insurance
Agents selling variable life insurance products must:
conversion privilege
Another characteristic of group insurance is the ______
average age, ratio of men to women
Another unique aspect of group underwriting is that the cost of the coverage is based on the ____ of the group and the _____
faster
Cash value builds up _____ for the limited-pay policies
balance of the debt
Credit life insurance cannot pay out more than the ______ so that there is no financial incentive for the death of the insured
time sensitive
Decreasing term is primarily used when the amount of needed protection is ____
certificate of insurance
Each insured participant under the group plan is issued a __________
younger, lower risk employees enter the group and older, higher risk employees leave
From the underwriting perspective, a group should have a steady turnover:
medical questions
Generally, if the group is large enough, there are no _____ since the plan will be issued based upon the nature of the group and the group's past claims experience
annually renewable term
Group insurance is usually written as _____ insurance
proving insurability
If an employee terminates membership in the insured group, the employee has the right to convert to an individual policy without ____ at a standard rate
5 years
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
1. conversion on termination of eligibility 2. conversion on termination of policy 3. death pending conversion *look over pg 41*
In Louisiana, the following rules apply to the conversion of a group life insurance policy to an individual policy:
minimum number of participants
In order to reduce adverse selection, the insurer will require a _____ in the group
death benefit
In the case of converting from a whole life policy to a term policy, the insurer may adjust the ______
husbands and wives
It is common to find joint life issued on ______
term or permanent
Joint life policies can be in the form of ____ or _____ insurance
annually renewable term product
Paying the minimum premium will make the policy perform as an ______
extended, lower premium
Since the death benefit isn't paid until the last death with survivorship life, the joint life expectancy in a sense is ______, resulting in a _____ than that which is typically charged for joint life
"second to die" or "last survivor"
Survivorship life is also referred to as ________
premium that is based on a joint age
Survivorship life is much the same as joint life in that it insures 2 or more lives for a ______
greatest, lowest
Term policies provide for the _____ amount of coverage for the _____ premium as compared to any other form of protection
group sponsor
The ____ is the policy holder and the one that exercises control over the policy in group life
guaranteed
The death benefit is _____ with whole life insurance
pays on the last death
The difference between joint life and survivorship life is that survivorship life ______
1. level premium 2. death benefit 3. cash value 4. living benefits
The following are key characteristics of whole life insurance:
term
The group life policy can convert to any form of insurance issued by the insurer except for _______ insurance
annually renewable term insurance
The insurance component of a universal life policy is always ________
future loss experience
The larger the number of people in the group, the more accurate the projections of _____ will be
one premium, cash
The single premium whole life policy is completely paid up after ____ and generates immediate _____
pays, invested
There are several other types of whole life policies that share the same key characteristics but also offer unique features based on how the policy owner ______ the premium or how the premium is invested
maximum age
There is usually a ____ above which coverage will not be offered or at which coverage cannot be renewed with a term policy
option A
Under ____, the death benefit remains level while the cash value gradually increases, thereby lowering the pure insurance with the insurer in the later years
face amount of the policy + the current amount of cash value
Under option B, at any point in time, the total death benefit will always be equal to the:
flexible premium adjustable life
Universal life insurance is also know by the generic name of _______
variable whole life insurance
Variable life insurance is sometimes referred to as _______
credit insurance
____ is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor
higher
All other factors being equal, limited-pay policies have a shorter premium paying period than straight life insurance, so the annual premium will be ______
contract (usually 3-6%), current
Although the insurer guarantees a _____ interest rate, there is also potential for the policy owner to get a ____ interest rate, which is not guaranteed in the contract but may be higher because of current market conditions
interest-sensitive policy
As well as being a flexible premium policy, universal life is also an ______
1. level of premium 2. cash value 3. death benefit 4. premium-paying period
At the time that an individual applies for a universal life policy, he or she selects the _______ that is desired
separate account
Because the insurance company is not sustaining the investment risk of the variable life insurance contract, the underlying assets of the contract must be held in a _______ which invests in stocks, bonds, and other securities investment options
reserves and other contract liabilities
Each separate account must maintain assets with a value at least equal to the ________
life insurance, tax advantages
If the corridor is not maintained, the policy is no longer defined as ____ for tax purposes and consequently loses most of the ______ that have been associated with life insurance
level
If the insurer assumes the risk of the indexed whole life policy, the premium remains ______
face amount
If the policy owner assumes the risk of the indexed whole life policy, the policy premiums increase with the increases in the _______
third, tax deferred
In whole life insurance, the cash value does not usually accumulate until the ____ policy year and it grows ______
nonforfeiture value
In whole life insurance, the cash value is also called the ______
refund of premiums
Increasing term is often used by insurance companies to fund certain riders that provide a _____ or a gradual increase in total coverage
straight life
Of the common whole life policies, ____ will have the lowest annual premium
death benefit
Only the amount of the _____ fluctuates with term insurance
equity index
The main feature of indexed whole life (or equity index whole life) insurance is that the cash value is dependent upon the performance of the ______
pure insurance
Under Option A, the _____ is actually decreasing as time passes, lowering the expenses, and allowing for greater cash value in the older years
1. Option A- the level of death benefit option 2. Option B- the increasing death benefit option
Universal life offers one of 2 death benefit options to the policy owner:
investment vehicles
Unlike universal life, most of the ______ in variable universal life policies do not guarantee return
annually renewable term
_______ is the purest form of term insurance
B; A
Since the pure insurance with the insurer remains level for life, the expenses of Option __ are much greater than those for Option ___
20-pay life and life paid-up at 65
Some of the more common versions of limited-pay life are:
re-entry option
Some policies contain a _____ where the insured, upon the end of a term policy with guaranteed renewable option, may qualify for a discounted premium rate with proof of insurability
pure life insurance
Term insurance is also known as ______
pure death protection
Term insurance provides what is known as ______
minimum premium
The ______ is the amount needed to keep the policy in force for the current year
dually regulated
Variable life insurance products are ____ by the state and federal government
level
Regardless of the type of term insurance purchased, the premium is _____ throughout the term of the policy
variable universal life insurance
______ is a type of insurance that combines many features of the whole life with the flexible premium of universal life and the investment component of variable life
level term insurance
______ is the most common type of temporary protection purchased
single premium
______ whole life is designed to provide a level death benefit to the insured's age 100 for one-time, lump sum payment
living benefits
______: with whole life insurance, the policy owner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered
Variable life insurance or annuities
_______ are contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
Fixed life insurance or annuities
_______ are contracts that offer guaranteed minimum or fixed benefits that are stated in the contract
decreasing term insurance
credit life is usually written as ______ audit may be written as an individual policy or as a group plan
cash value
Although adjustable life policies contain most of the common features of other whole life policies, the _____ of an adjustable life policy only develops when the premiums paid are more than the cost of the policy
1. minimum premium 2. target premium
Since the premium can be adjusted in the universal life insurance, the insurance companies may give the policy owner a choice to pay either of the 2 types of premiums:
1. purpose of the group 2. size of the group 3. turnover of the group 4. financial strength of the group
Some characteristics of concern to a group underwriter include the following:
31 days
The employee usually has a period of _____ after terminating from the group in order to exercise the conversion option
inflation
The indexed whole life policy's face amount increases annually to keep pace with ______ without requiring evidence of insurability
1. the premium is based on a joint average age that is between the ages of the insureds 2. the death benefit is paid upon the first death only
The joint life, which is more commonly found as joint whole life, functions similarly to an individual whole life policy with 2 major exceptions:
whole life
The most common type of permanent insurance is ________
1. level 2. increasing 3. decreasing
3 types of term insurance coverage:
return of premium
______ life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid
employee-employer
Group insurance is usually written for _____ groups, but other types of groups are also eligible for coverage
1. employers 2. debtor groups 3. labor unions 4. credit unions 5. associations 5. other organizations
Group life insurance plans may be sponsored by:
buy-sell agreement and other business needs
Joint life is also used to insure the lives of business partners in the funding of a ______
creditor
When credit insurance is written as a group policy, the _____ is the owner of the master policy
juvenile life insurance
_____ is any life insurance written on the life of a minor
group life insurance
_____ is issued to the sponsoring organization, and covers the lives of more than one individual member of that group
securities
Due to the element of investment risk, the federal government has declared that variable contracts are _____
1. a flexible premium that can be increased, decreased, or skipped as long as there is enough value in the policy to fund the death benefit 2. increasing and decreasing the amount of insurance 3. cash withdrawals or policy loans
Variable universal life insurance, like universal life itself, has the following features and characteristics:
proof of insurability
With adjustable insurance, increases in the death benefit or changing to a lower premium type of policy will usually require _______
indexed whole life policies
______ are classified depending on whether the policy owner or the insurer assumes the inflation risk
variable life insurance
______ is a level, fixed premium, investment-based product
universal life insurance
Also with ______, the policy owner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to cover the monthly deductions for cost of insurance
adjustable life policy
An _____ can assume the form of either term insurance or permanent insurance
mortgage or other debts
Decreasing term coverage is commonly purchased to insure the payment of a ______ if the insured dies prematurely
inflation and the increasing cost of living
Increasing term policy would be ideal to handle _______
fixed premiums and guaranteed minimum death benefit
Like traditional forms of life insurance, Variable life insurance policies have ________
face amount (death benefit) changes
Term coverage available is based on how the ______
premium
The ____ for joint life would be less than for the same type and amount of coverage on the same individuals
policy owner
The _____ bears the investment risk in variable contracts
target premium
The ______ is a 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
1. straight whole life 2. limited-pay whole life 3. single premium whole life
The three basic forms of whole life insurance are:
attained age (the insured's age at the time of transaction)
Upon selling, renewing, or converting the term policy, the premium is figured at _______
"statutory definition of life insurance"
Under Option A, the reason the death benefit experiences an increase at a later point in time so that the policy will comply with the _______ that was established by the IRS and applies to all life insurance contracts issued after December 31, 1984
Option B
Under ______ 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
securities
Variable universal life insurance is a _____ version of the universal life insurance
universal life
With ______ insurance, the policy owner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again
annually renewable term
With ______, 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
1. increase or decrease the premium or the premium-paying person 2. increase or decrease the face amount 3. change the period of protection
With adjustable life insurance, the policy owner has the following options in the event that they need to change their needs:
converting
With adjustable life, the policy owner also has the option of ____ from term to whole life or vice versa
cash value
With variable life insurance, _____ of the policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer
face amount of the policy
With whole life insurance, the cash value, created by the accumulation of premium, is scheduled to equal _____ when the insured reaches the age 100
Term insurance
____ is temporary protection because it only provide coverage for a specific period of time
decreasing term
____ policies feature a level premium and a death benefit that decreases each year over the duration of the policy term
Return on premium policies
_____ are structured to consider the low risk factor of a term policy but at a significant increase in premium cost
young professionals
_____ benefit greatly from term insurance because of their uncertainty in their life
Increasing term
_____ features level premiums and a death benefit that increases each year over the duration of the policy term
joint life (First-to-die)
_____ is a single policy that is designed to insure 2 or more lives
straight life (also referred to as ordinary life or continuous premium whole life)
_____ is the basic whole life policy
permanent
_____ life insurance is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid
Whole
_____ life insurance provides lifetime protection, and includes a savings element (or cash value)
level premium term
_____ provides a level death benefit and a level premium during the policy term
"statutory definition of life insurance"
_____ states that there must be a specified "corridor" or gap maintained between the cash value and the death benefit in a life insurance policy
adjustable life
_____ was developed in an effort to provide the policy owner with the best of both worlds (term and permanent coverage)
limited-pay
_____ whole life is designed so that the premiums for coverage will be completely paid up well before age 100
level premium
_____: the premium for whole life policies is based on the issue age, therefore, it remains the same throughout the life of the policy
variable
______ annuities keep pace with inflation, and are determined by the value of securities backing it
1. if the insured dies during this term, the policy pays the death benefit to the beneficiary 2. If the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term 3. there is no cash value or other living benefits
pure death protection:
