Life Insurance Study Set

What annuity sent them an option provide income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?

Life income with period certain

A whole life policy that requires the policy owner only pays premiums for a specified number of years is known as what kind of policy?

Limited pay whole life

What type of life insurance policy is life paid up at age 65?

Limited pay whole life

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

Lump-sum payment

What settlement options are available in life insurance policies?

Lump-sum/cash, fixed period, fixed amount, life income, interest only

How soon can income payments begin in an immediate annuity?

No later than 1 year from the time of annuity purchase

With a single premium deferred annuity, when will payments become available?

No sooner than one year after purchase

Can a business or a corporation be an annuitant?

No, an annuitant must always be a natural person

Life insurance contracts are unilateral. What does that mean?

Only one party makes a legally enforceable promise

What universal life option has a gradually increase in cash value and a level death benefit?

Option A

What are the death benefits options in universal life policies?

Option A - level death benefit, and Option B - increasing death benefit

What policy states that it will pay a specified face amount if the insured dies during the 20 year paying period but nothing if after?

20 yr level term

An individual has a contract I will provide him a certain amount of income for the rest of his life. However, not an insurance policy. What type of contract does he have?

An annuity

In an annuity, accumulated money is converted into a stream of income during which phase?

Annuitization period

In a life insurance contract, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe?

Unilateral

In what type of life insurance policies can the policy owner skip premium payments without the policy lapsing?

Universal Life

When would a misrepresentation on an insurance application be considered material?

When it may alter the underwriting decision

Informing an insurance contract when does an acceptance usually occur?

When the insurer approves a prepaid application

When does an insurance policy go into affect?

When the policy is delivered and the premium is paid

Decreasing Term benefits

a form of term insurance in which the benefits that will be paid to the beneficiary are reduced over time and the premium remains constant

Insurance is a contract that protects the insured from what?

loss

What is the main responsibility of the companies underwriting unit?

Risk selection

What type of whole life insurance policy generates immediate cash value?

Single premium whole life

What are the 3 types of risk rating classifications in life insurance?

Standard, substandard, and preferred

What type of annuity is suitable for someone who wants to select a benefit option that will pay the largest amount only for as long as he or she lives?

Straight life

What type of life insurance policy offers pure death protection?

Term life

I'm flexible premium payment annuities, the term flexible refers to what?

The amount of premium

What is the name of the process that insurance companies use to determine whether or not an application is insurable?

Underwriting

Under a 20 pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid for what time period?

For 20 years or until the insured's death, whichever occurs first.

How long will a life annuity with a 15-year period certain pay?

For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period; then the payments will last for 15 years

An annuity purchase with multiple payments that begin income payments after one year from the moment of purchase is known as what type of annuity?

Flexible premium deferred annuity

When was the policy summary for life insurance policies to be delivered to the policy owner?

At delivery

Life insurance endowment occurs when?

At insured's age of 100 years

When was insurable interest exist in a life insurance policy?

At the time of application

When is the offer usually made on an insurance contract?

At time of application submission.

In variable universal life, to watch policy component is the term "variable" refer?

Cash value and death benefit

What happens to the cash value when a whole life insurance policy matures?

Cash value is paid to the policyowner

What are the dividend options in life insurance policies?

Cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment

When they change needs to be made on the application for insurance, what is the best method for correcting the information?

Complete a new application or correct and have applicant initial the changes

Life insurance contracts are prepared ranchers and must be excepted by the insured on an as is basis. This describes what aspect of a life insurance contract?

Contract of adhesion

An individual has just borrow 10 K on a five your note from his bank. The notice due in installments. What type of life insurance policy would best be suited to the situation?

Decreasing term

What type of insurance is best suited to cover a mortgage?

Decreasing term

What are the two classifications of annuities according to the time when annuity payments begin?

Immediate and deferred

What type of annuity can be purchased with a single premium?

Immediate annuity

What are two elements necessary for life insurance contract to have a legal purposes?

Insurable interest and consent

What entities make up the medical information bureau?

Insurers

What are the three main instances when insurable interest exists in life insurance?

Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest earned on the withdrawn cash value

What type of report provides information about the applicant's hobbies, habits and financial status?

Investigative consumer report

Mortality tables are you say insurance companies to predict what?

Life expectancy and death rates for specific groups of individuals

An annuity that provides a set amount of income for two or more persons with the income ceasing upon the first death is a ________________ annuity.

Joint life

Fair Credit Reporting Act

A federal law that established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used.

What type of premium is charged on a straight life policy?

A level premium for the life of the insured

What is policy replacement?

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value

What are the two phases of an annuity?

Accumulation and annuitization (or pay-in and pay-out)

Whole life policies provide protection until the insured reaches what age?

Age 100

What are the four elements of an insurance contract?

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

What elements of an adjustable life policy can be changed by the insured?

Amount and payment period of premium, face amount, and period of protection

What is a warranty and an insurance contract?

An absolute true statement upon which the validity of the insurance contract is based

At what point does coverage begins when an agent issues a conditional receipt for a life insurance policy?

Either on the date of the application or the date of medical exam (whatever is last)

If the annuitant dies before the annuitization period begins, what will the beneficiary receive?

Either the amount paid in or the cash value, whatever is greater

What type of annuity credits it's interest based on an index such as S&P 500?

Equity indexed

What happens to the premium in an annual a renewable term life policy?

It increases with each renewal.

What is adverse selection?

People who are more likely to submit insurance claims are seeking insurance more often than preferred risks.

What type of insurance offers a cash value?

Permanent insurance, usually whole life

How can life insurance policies be delivered to the insured?

Personally delivered by the agent or sent via mail

What document describes the specific information about a policy?

Policy summary

Who is entitled to the cash values in a life insurance policy?

Policyowner

Who must have insurable interest in the insured?

Policyowner

If an insurer needs to obtain information about the application from investigators, what is the insurer required to do?

Provide the applicant a Disclosure Authorization Notice

What nonforfeituee option provides coverage for the longest period of time?

Reduced paid-up

What provision allows the policyholder to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?

Reinstatement

If Anisha feels to have Tammy Hampton signature on the insurance application what must he/she do?

Return the application for signature

What is the best way to handle and complete applications?

Return them to the applicant for completion.

Regarding annuitant payments, what is the difference between the annuitant and the beneficiary of an annuity?

The annuitant receives payment from the annuity during the annuitization period, whereas the beneficiary receives benefits after the annuitant's death.

Permanent Protection

Whole life

What type of insurance will perform this function of cash accumulation?

Whole life

Under Option B in a universal life policy, what happens to the death benefit?

The death benefit increases each year by the amount of the cash value increases

An applicant for life insurance misstated her age on the policy application. How will this affect the death benefit?

The death benefit will be adjusted to the amount that the insured could obtain for her correct age.

In annually renewable term insurance what is the annual premium based on?

The insured's attained age

In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?

The longer the period selected, the smaller each installment will be

What is the difference between a single premium and a flexible premium payment option in a deferred annuity?

The number of payments that purchase the annuity

How is the premium determined in a joint life insurance policy?

The premium is based on the average age of the insureds

Why are policy loans not available on term life insurance policies?

There is no cash value to borrow against

How is information obtained for an investigative consumer report?

Through interviews with the applicant's associates, friends and neighbors

What is the purpose of settlement options in life insurance policies?

To determine how the death benefit will be paid to the beneficiary

What is the purpose of the agents report during the application process?

To help in the underwriting process.

What is the purpose of establishing the target premium for universal life policy?

To prevent the policy from lapsing

What is the main reason for purchasing an annuity?

To provide income that the annuitant cannot outlive

During which stage in the insurance process to ensure was a value information or that identifies adverse selection risks?

Underwriting

What type of annuity requires an agent to have a securities license?

Variable annuity

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

When does an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy

The death protection component of a universal life policy is expressed as what type of coverage?

annually renewable term

What policy component must decrease in decreasing term insurance?

face amount (death benefit)

What provision in a life insurance policy extend coverage beyond the premium due date and protects against unintentional policy lapse?

grace period

Who bears the investment risk in a fixed annuity?

insurance company

What risk classification would typically qualify for lower premiums?

preferred risk

Decreasing Term Insurance

term insurance in which the annual premium remains constant but the face amount of the policy declines each year