Life Overview-Type of Policies

Which of the following terms refers to the period of time during which the annuitant makes premium payments to an annuity?

accumulation period

Which of the following options may allow a vanishing premium in life insurance policies?

dividends

Which of the following is an advantage of buying an annually renewable term policy?

evidence fo insruability is not required at renewal

All of the following are possible features of variable life insurance policies except

level term

Annuities are purchased to

liquidate an estate

Liability is usually determined by proving

negligence

Level/Term Policies

premium remain the same throughout the life of the policy

3 Parties to an Annuity Contract

the owner, annuitant and the beneficiary

Low Interest Rate

traditionally charges for policy loans is one of the features that has made loans attractive with a 4% to 6% fixed rate being common in the past most insurers now charge a fixed rate of 8%

All of the following statements are true regarding a noncontributory group life insurance plan except

up to 25% of employees may contribure to the premium

Limited-Pay Policies

usually have higher premiums than straight life policies because the premium payment period is considered

Variable Rate

when they apply the policy specifies when the insurer will adjust the rate, such as on the first day of each calendar quarter

Universal Life

a combination of flexible premium and adjustable life insurance policy

Policy Loan

a nonforfeiture value in which an insurer loans a part of all of the cash value of the policy assigned as security for the loan to the policyowner

in which of the following situations insurance interest does not exist?

a person is insuring the life of his best friend

Joint Life

a single policy that is designed to insure two or more lives

Exposure

a unit of measure used to determine rates charged for insurance coverage

Survivorship Life Insurance

also called second-to-die or last survivor, similar to joint life but the policy will pay the benefit upon the last death

Adjustable Life Policy

can be either term or whole life, the insured chooses the amount of coverage that is needed and the premium that he or she can afford the policy is adjusted as the insureds needs change

Cash Value Feature

cash value build-up in a life insurance policy supports various other features

Front-End Charge

cash value policy may very well involve a substantial front-end charge or load which will appear as a reduction or in som instances as an elimination of cash value in the first years of the policy

A term life insurance policy may be changed into a whole life insurance policy is

convertible

Which of the following is an advantage of buying an annually renewable term policy?

evidence of insurability is not required at renewal

Decreasing Term Policies

feature a level premium and a death benefit that decreases each year of the policy

Increasing Term Policies

have a level premium, as do all term policies, but the face amount increases every year of the policy term

A term policy would be preferable to a whole life policy when the individual wants the policy to

have the largest death benefit for the smallest premium

Units with the same or similar exposure to loss are referred to as

homogeneous

Surrender Charge

if the policy is surrendered within a certain time period

Dangers that are carried onto the worksite by employees are known as

imported

In variable life policies, where is the cash value invested?

in seperate accounts

Spendthrift Clause

is designed to protect the beneficiary from losing the life insurance proceeds to creditors, assigning the proceeds to others or spending large sum recklessly

Three Primary components to an Insurance Projection That Affect the Insurance Premium

-expense rate for cost of administering the policy -mortality risk rate based on death assumptions -the rate of dividends to be created as earnings

Four Factors in Determining Cash Value

-premium paid -the expenses charged -the cost of term insurance -the investment earnings

Factors in Determining rates

-the age of the insured -medical history -occupation -sex

Liability Losses arise from 3 sources

1. a court if it awards legal damages to a person from an organization responsible for negligently injuring that person 2. the cost of a legal defense 3. loss prevention arising from potential legal liability

Indemnity

a collateral contract of assurance by which one person secures another against an anticipated loss that signifies compensation has been given to an insured in order to relieve him or her from a loss

Straight Life

also known as continuous premium whole life, charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit

The multiple income calculation method takes which of the following into account?

annual earnings

Dividends

are different from cash value, are paid on participating whole life policies are a refund of the premium

Annuities

are not technically insurance policies, annuity is a contract that provides income for a specific period of time or for life

Which of the following is NOT a group typically recognized as eligible for group insurance?

association-patron groups

Term Life Insurance

is temporary protection that lasts only for a specified period of time

Main Purpose of Life Insurance

is to provide the insureds peace of mind, and the knowledge that their family and loved ones will be financially protected after the insured's death

Reduction

lessening the possibility or severity of a loss. actions such as installing smoke detectors or having annual physical to detect health problmes early are examples of reduction

Accumulation Period

or pay-in period, that are invested and earn interest, after money has been paid in at a specified time regular payments are made to the person designated in teh contract

Payment Feature

premium modes are methods of paying policy premiums -annually or once every 12 months -semi-annually or twice every 12 months -Quarterly or once every three months out of 12 -monthl or once every month

Bodily injury liability includes payments for all of the following except

property damage

Whole Life Insurance

provides permanent protection

Which of the following features is available in term life insurance?

renewability

Which of the following types of policies does not have a savings component?

term life

Single-Premium Whole Life

these policies use a one-time, lump-sum premium payment to provide a level death benefit to the maturity of the policy

Limited-Pay Whole Life

a variation on straight life, the only difference is that limited-pay policy specifies a set number of years during which the policyowner must pay premiums