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1035 Contract Exchange
A tax-free exchange of one annuity contract for another, one life insurance policy for another, or one life insurance policy for an annuity. The contracts do not have to be issued by the same company and no money is allowed to be received
Non Forfeiture Options
Extended term insurance, Reduced-paid up insurance Cash surrender
Fixed Amount Installment Option
Pays a fixed death benefit in specified installment amounts until the principal and interest are exhausted.
Estate Conservation
Purchasing a life insurance policy in order to avoid the forced sale of assets upon death
Reduced death benefit prepayment
What is the primary feature of a viatical settlement?
a MEC can be describes as
a life insurance contract that has accumulated cash values more than the IRS can allow
all life insurance policy summaries typically include
a policy cash value
non forfeiture option In a cash value life insurance policy allows
a policy owner to terminate the policy for a reduced paid-up policy of the same type
life insurance policy guarentees to stated beneficiary in case of death of insured
a specific amount of money
there may be a dollar amount limit on which options maximum benefit
accelerated death benefit option
policyowner dividends usually
accumulate dividends with interest
taxable dividend option
accumulation at interest
What does the Group Life underwriting risk selection process help protect insurance companies from?
adverse selection
a non-contributory health insurance plan helps the insurer avoid
adverse selection
because all eligible employees are usually covered, non-contributory plans are desirable from an underwriting standpoint because
adverse selection is minimized
How does life insurance create an immediate estate?
after the first premium is paid, the face amount of the policy may be available to the beneficiary
under group life insurance, the conversion privilege
allows an employee to convert from group to individual life insurance upon employee termination
The Reduction of Premium Dividend Option
allows policyowner to use the dividend to pay all or part of the next premium due on the policy
Interest Only Settlement Option
allows proceeds to remain with insurer and earnings to be paid to the beneficiary on a monthly basis
Interest Only Settlement Option
allows proceeds to remain with the insurer and earnings to be paid to the beneficiary on a monthly basis is called interest only
interest only settlement option
allows proceeds to remain with the insurer and earnings will be paid to the beneficiary on a monthly basis
A Renewable Term Life insurance policy can be renewed
at a predetermined age or date, regardless of insurers health
An attending physician's statement would be appropriate for which life insurance purpose?
at the request of the insurer when it could affect the underwriting decision, but there needs to be consent of the applicant
Purpose of Social Security
augments a sound personal insurance plan
accelarated death benefit option
before payment of the benefit is made , specific conditions must exist, such as terminal illness
blackout period
begins when the youngest child turns 16 and up until the spouse turns 60.
The tax advantage of life insurance is that:
beneficiary usually will not pay income tax on proceeds
The period in which there are no Social Security benefits for the surviving spouse is called the
blackout period
common disaster clause
can ensure that contingent beneficiary will recieve proceeds if the insured and primary beneficiary die within the same time period or near
acceleraated death benefit allows for
cash advances to be paid against the death benefit IF the insured becomes terminally ill
Under a group life policy, the insurer will issue an individual _____ to the policyowner for delivery to each person insured.
certificate
provision that allows a policyowner to temporarily give up rights to secure a loan is called
collateral assignent
Ownership of a life insurance policy may be temporarily transferred with a(n)
collateral assignment
waiver of premium rider is for those who are
completely and permanently disabled
accelerated death benefit option
considered a living benefit option
association and labor groups have
constitution and bylaws
riders that can increase death benefit amount
cost of living, accidental death rider, guaranteed insurability rider
what happens to coverage to a children term rider when the child reaches a certain age
coverage is eliminated
an insured status under social security can be described as
currently and fully insured
what would not be subject to taxation under MEC
death benefit
With a common disaster provision, a policyowner can be sure that if both the insured and the primary beneficiary die within a short period of time,
death benefits will be paid to contingent beneficiary
liquidity does not
determine insurance premiums
definitions, other insurance, and conditions
elements of insurance policy
a field underwriters main task is to
ensure the accuracy and completeness of an individuals medical information
Level premium permanent insurance accumulates a reserve that will eventually
equal the face amount of the policy
standard whole life policy death benefit would
face amount
accelerated death benefit option
face amount and policy premium are not affected by the payment
cost of living rider if consumer price index has went up 4%
face value of policy may increase 4 %
individual underwriting in group policy true or false
false
similarities of universal and whole life policy
fixed cash value, fixed death benefit, ability to take out a policy loan
settlement options for life insurance policy
fixed period, lump sum, life income
difference between universal and whole life policy
flexible premium schedule
3 elements to variable life insurance policy are
flexible premiums, flexible death benefit, and choice of cash will be invested
a tax free 1035 section exchange of a life insurance policy to a different policy is permitted if it occurs
from insurer to insurer, and the policyowner does not recieve any cash
group life insurance policies are characterized by
group underwriting, master contracts, and probationary period
if there are no eligible children with the surviving spouse when the breadwinner dies the blackout period starts
immediately
incontestable clause applies to
income, marriage status, and address
who is responsible for assembling insurance policy forms for insureds
insurance carriers
accumulation at interest option
invests policy owners money and adds interest earnings to the initial amount of the dividends
life insurance policy written in one contract for two people is payable upon the first death is called
joint
a payor benefit waives the premium in connection to
juvenile insurance
whole life insurance policy where premiums are paid up after 20 years are
limited pay life insurance policy
a permenatnt life insurance policy where the policyowner pays premiums for specified number of years is called a limited pay policy
limited pay policy
what would be subject to taxation under MEC
loan against cash value, policy dividend, policy withdrawal
per capita
method of insurance (life) distribution that ensures all living members are identified in the life insurance policy will receive an equal amount of the life insurance proceeds.
The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid
minus debt, without interest
factors that determine insurance premiums
mortality, expenses, interest
life insurance claim that involves per capita distribution of policy proceeds would be payable to the
named living beneficiaries
extended term insurance is a
nonforfeiture option
accelerated death benefit option riders are
offered with no increase in premium
A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)
partial surrender
type of rider that will waive premium if the parent who pays premium of child dies
payor benefit
fixed amount settlement option
pays a fixed death benefit in specified amounts installment amounts until the principal and interest are exhausted
level in term insurance refers to
policy face amount
estate
policy proceeds are obtained in a lump sum and are immediately invested
Reduced Paid-Up Option
policy will have decreased face amount
all of these statements concerning whole life insurance are true
policyowner can take out loan up to face amount, coverage is normally temporary, death benefit is not affected by outstanding loans
adjustable life policy allows change of
premiums and face amount
automatic premium loan provision authorizes insurer to withdraw from a policy cash value the amount of
premiums due if the premium has not been paid by the end of the grace period
Purpose of Social Security
provides basic protection against financial problems accompanying death benefit, disability, and retirment
purpose of social secruity
provides retirement and survivor benefits to the worker and their family
non taxable dividend options
reduction of premium, one year, paid up addition
disability income rider
rider which pays a life insurance policyowner a monthly amount in the event of permanent and complete disability
premium payments for universal life insurance are not used for
separate investment accounts
spendthrift clause
statement in a settlement agreement that indicates the proceeds of a policy will be free from attachment of seizure by the beneficiaries creditors
results exclusion clause
states the insurer is excluded from paying the death benefit only if the death is not a result of war
per capita ensures
that if one of the beneficiaries dies, then the remaining will see their share increased accordingly
converting a group health plan to permanent insurance requires
the conversion being applied for within 31 days of the termination
adverse selection
the tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others
assoication or labor group
they are organized and maintained in good faith for purposes other than obtaining life insurance
viatical settlement contract
transaction that involves an immediate payment to the policyowner prior to the death of the insured
life insurance policy That is subject to a contract interest rate or current annual interest rate is
universal life
pays a death claim in the amount of the death benefit plus the savings element is
universal life
the types of life insurance used to cover key employee indemnification are
universal, whole, term
a secrutites license is required for producer to sell
variable life
3 brothers have first to die joint life policy covering all three of their lives, if someone dies then all policy proceeds
will no longer provide insurance protection
if term life insurance is renewable, the policyowner is purchasing the right to renew the policy
without showing proof of insurability
double indemnity rider benefit will be paid if
you die instantly from a car accident
minimum penalty for obtaining information about a client without having legitimate reasons to do so
10,000
spendthrift clause
A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she receives them.
