Pre-Licensing Chapter 2

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Annuity: Annuitization period

1. Payout 2. Annuity 3. Liquidation

The federal Government has capped the interest rate to

10%

Joint life is based on

2 or more lives

Survivorship Life is based on

2 or more lives

Annuity: Deferred payment is?

After a year

When does a whole life policy mature?

Age 100

ART stands for?

Annually Renewable Term

Person receiving money from Annuity =

Annuitant

Annuity income is based on?

Annuitant's age and gender

Premium is based on

Attained age at time of conversion

Person receiving money if something happens to the annuitant

Beneficiary

What are the two components of Universal life?

Cash value and Insurance(always ART)

Single premium whole life is

Completely paid up and generates immediate cash value

Variable life requirements are?

Current Prospectus, no guarantee, Separate account

What is a decreasing terms used for?

DEBT

DECREASING term means

Death Benefit goes down but the premium stays the same

How does ART work

Death benefit remains the same Premium increases annually NO proof needed

Term life insurance is happening to what?

Face amount/Death Benefit

Annuity: How are they invested?

Fixed or Variable

Universal Life is also known as

Flexible premium/adjustable life

whole life DB is

GUARANTEED and remains Level throughout the term

Employers use ART for?

Group Insurance

What does an equity indexed annuity do?

Guarantee's a minimum premium, invested on an aggressive rate, to aim for a higher return.

How are annuities paid out?

Immediate or deferred

Universal Life: Death Benefit option B

Increasing Death Benefit option

Whose risk is it in life insurance

Insurance Companies

Whole life: Cash value has a guaranteed?

Interest rate

Annuity: Fixed means

Interest rate stays the same

Annuity: Flexible means

Interest rate varies

Whole life premium is

LEVEL

Annuity: Licenses needed?

LIFE & SECURITIES!

Universal Life: Death benefit option A

Level Death Benefit option

What three characteristics does variable life have?

Level premiums, Guaranteed minimum death benefit, Cash value is not guaranteed because it is invested in the market

Annuity: Periodic premiums can be

Level, Monthly, or Flexible

Variable Life insurance has what licensing requirements?

Life & Securities

Whole life has:

Living benefits that the policy owner can BORROW against the cash value

Uses of Annuities are?

Lump sum settlement, Retirement Plan, Retirement income, Education funds

What are the two types of premiums for universal life?

Minimum = Keeps the policy in force for the year (ART) Target = recommended amount to keep policy in force for lifetime

Purchased the annuity =

Owner

Annuity: Accumulation period

Pay-in period

CASH VALUE life insurance is also known as

Permanent Protection

LEVEL term means

Premium and Death Benefit stay the same throughout the term

INCREASING Term means

Premium goes up but the death benefit stays the same

What is the policy owner paying for in a Cash Value Life Insurance

Protection and savings

Term life insurance can be

Renewed or Converted

Annuity: Investment is kept??

SEPARATE ACCOUNT!

Annuity: What are the ways to be funded?

Single premium or periodic premium

Equity Index follows?

Standard and Poor's 500

Equity Indexed Annuity is a

Type of fixed annuity

ART is convertible to

Whole life insurance

Annuity: Immediate payment is

Within a year

Variable annuity is?

a hedge against inflation

Universal Life: The cost of insurance must

always be paid

Whole life has cash value that is

an accumulation of premiums

Whole life - the cash value is scheduled to

equal the face amount, at age 100

Joint life is paid upon the

first death

Survivorship life is paid upon

last death

Straight (Ordinary) Life Insurance is

level PREMIUM, purest form of whole life insurance

Term life insurance has

no CASH VALUE

LIMITED Pay insurance is

pays the PREMIUM in a limited time

TERM Life Insurance is

temporary life insurance provided for a specific period of time

SINGLE Premium =

the PREMIUM is paid in a lump sum

The type of Whole Life Insurance is

what is happening to the PREMIUM


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