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LLQP > 10 - How Do I Apply? > Flashcards

10 - How Do I Apply? Flashcards

1
Q

Define “Material Misrepresentation.”

A

A misrepresentation of fact, such that, if the truth had been known, a reasonable insurer would have refused to issue the insurance or would have charged a higher premium for it.

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2
Q

What is innocent/negligent misrepresentation?

A

A false representation made without the intent to deceive the other party.

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3
Q

What is the difference between Fraud, Forgery, and Theft?

A

Fraud will terminate a contract beyond the incontestability period.
Forgery and theft will not. If they are discovered within the contestability period they will void the contract.

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4
Q

What is meant by “constructive notice?”

A

Any information given to the agent by the applicant or the life insured is deemed to have been given to the insurer.

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5
Q

What are rated premiums?

A

Higher priced premiums.

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6
Q

What is an exclusion rider?

A

A rider that excludes some coverage.

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7
Q

What is the purpose of the Medical Insurance Bureau (MIB)?

A

To provide information for the underwriting process to insurance companies (often prompts to ask for more information where the life insured may be substandard risk).

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8
Q

What are the sources of information for a two-party contract and who supplies them?

A
  1. Personal Information: provided by applicant.
  2. Medical Information: provided by applicant.
  3. Details of the proposed insurance product: provided by agent/understood by applicant.
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9
Q

What are the sources of information for a three-party contract and who supplies them?

A
  1. Personal Information: provided by applicant and life insured.
  2. Medical Information: provided by life insured.
  3. Details of the proposed insurance product: provided by agent/understood by applicant.
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10
Q

What are the 5 details addressed in the application for life insurance?

A
  1. An insurable interest has been established.
  2. The contract has been chosen that suits the client’s needs.
  3. The beneficiary has been named.
  4. The settlement option has been chosen.
  5. For universal life contracts only, a death benefit has been chosen.
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11
Q

What are the 7 persons that can be an insurable interest?

A
  1. Own life
  2. Spouse’s life
  3. Children’s life
  4. The life of anyone upon whom the person is dependent for support or education
  5. Employee’s life
  6. The life of anyone in whose life the person has a financial interest
  7. Grandchildren
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12
Q

What is a personal contract?

A

The type of contract in which a person insures themselves and is both the insured and the life insured.

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13
Q

What is a joint-first-to-die contract?

A

When one of the two insured dies, the death benefit will be paid to the surviving insured.

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14
Q

What is a joint-last-to-die contract?

A

When both of the insureds die the death benefit will be paid to the beneficiary.

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15
Q

Name the 6 possible beneficiaries.

A
  1. A person or persons
  2. A minor
  3. A class of persons
  4. A business
  5. A trustee
  6. An estate
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16
Q

What is the difference between revocable and irrevocable beneficiary?

A

A revocable beneficiary may be changed.

An irrevocable beneficiary cannot be changed without writen consent.

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17
Q

What are the 4 settlement options?

A
  1. Lump-sum payment
  2. Interest option
  3. Instalment option
  4. Life annuity option
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18
Q

What are the 4 options for a Universal Life Death Benefit?

A
  1. Level death benefit (LDB)
  2. LDB + total account value
  3. LDB + cumulative gross deposits
  4. Death Benefit, indexed
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19
Q

What is a deductible?

A

It is applied against the first claim of the year and is continued to be applied until it is fully satisfied. Set dollar amount.

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20
Q

What is co-insurance?

A

Also called “co-pay” applied against every claim. % charge. 80% co-pay means insured loses 20% of their claim to the co-insurance charge.

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21
Q

What is the difference between an individual and family deductible?

A

Individual deductible is a subset of family deductible.

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22
Q

Define “Master Contract.”

A

The form in which a policy is issued to the group policy owner.

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23
Q

Define “Group Insured.”

A

The individuals covered by a master contract.

24
Q

What is a “Certificate of Insurance?”

A

The document issued to the group insured with the details of the master contract.

25
Q

What is a standard group?

A

A group of not less than 25 members to be covered in a master contract.

26
Q

What is a contributory group insurance plan?

A

A plan in which the employee contributes towards the premium cost.

27
Q

What is a non-contributory group insurance plan?

A

A plan in which the employer pays 100% of the premiums

28
Q

What does the “non-discriminatory benefits schedule” refer to?

A

All employees in the same class receive the same benefits.

29
Q

What are the 4 eligibility criteria for joining a group plan?

A
  1. Actively-at-work provision
  2. Probationary period
  3. Eligibility period
  4. Waiting period
30
Q

What are the 3 essential duties of an agent when completing a contract?

A
  1. Witnessing the signature of the applicant
  2. Obtaining the first premium
  3. Forwarding the application to the insurer for underwriting
31
Q

What is a Temporary Insurance Agreement (TIA)?

A

Binding contract between insurance company and insured. Provides a guaranteed amount of life insurance during underwriting process and before the policy is actually issued and delivered.

32
Q

What are Mortality Rates?

A

The number of people expected to die at a given age based on 1,000 people of the same age.

33
Q

What are the 2 ways a rated policy can increase premiums?

A
  1. Permanent or Temporary increase

2. Flat Dollar or Percentage increase

34
Q

What is the difference between net premium and gross premium?

A

Net premium is the combination of two factors (mortality rates and investment income).
Gross premium is net premium plus expense load.

35
Q

What is the difference between a tax deduction and a tax credit?

A

A tax deduction is an expense that can be deducted from taxable income.
A tax credit is a deduction from tax payable.

36
Q

What are the 4 criteria that must be met for a policy to be used as collateral life insurance?

A
  1. Loan must be for gainful purpose (earning business income)
  2. Lender must be financial institution
  3. Lender must require life insurance policy as a condition of loan & policy must be assigned to the institution
  4. Tax deduction must be reasonable & pro-rated using ratio of life insurance coverage to balance of loan
37
Q

Define “Absolute Assignment.”

A

It transfers all the rights of the policy owner to another party.

38
Q

What is a registered policy?

A

Some RRSPs combine insurance & retirement savings. Insurance not tax-deductible, but retirement savings is.

39
Q

What are the 4 criteria that establish morbidity rates?

A
  1. Age
  2. Gender
  3. Smoking status
  4. Occupational classification
40
Q

What are the 3 other factors that affect a disability income replacement policy?

A
  1. Motivation
  2. Stability
  3. Claims history
41
Q

What are the 3 ratings that determine the premiums for group policies?

A
  1. Experience rating
  2. Manual rating
  3. Blended rating
42
Q

What are the 2 accounting methods used for fully-insured group plans?

A
  1. Non-refund accounting method

2. Retention accounting

43
Q

What is a “self-insured plan?”

A

The employer pays all claims. There is often “stop-loss insurance” which pays for a portion of each claim or for claims above a certain amount.

44
Q

What is an Administrative Services Only (ASO) contract?

A

It is a contract in which the insurance company administers the self-insured plan for the employer.

45
Q

What are the tax implications of Group Premiums?

A

If the employee pays the premium, the benefits will be received tax-free.
Group life plan premiums are a taxable benefit and benefits will be received tax-free.
Group disability plan premiums can be a taxable benefit or not. If they are not then the employee will pay tax on their benefit.

46
Q

What is a contract of adhesion?

A

It is the term used for a life insurance contract. There is no opportunity for negotiation.

47
Q

What are the 5 basic components covered when a policy is issued?

A
  1. Basic promise of the policy
  2. Consideration (premium details)
  3. Execution portion of the policy (date of issue of the policy)
  4. Effective date of the policy (date that policy takes effect)
  5. Other details
48
Q

What are the 6 elements that the Uniform Life Insurance Act states every policy must clearly indicate?

A
  1. Name of the insured
  2. Name of life insured
  3. Amount of insurance money to be paid and conditions for payment
  4. Amount of premium and grace period for payment
  5. Conditions for reinstatement if policy lapses
  6. Participating/non-participating
49
Q

What are the 7 provisions in a contract that define the rights of the policy owner?

A
  1. Suicide exclusion clause
  2. Conversion privilege
  3. Age adjustment
  4. Premium payments
  5. Loans
  6. Reinstatement privilege
  7. Incontestability clause
50
Q

What are the 5 nonstandard elements of a contract?

A
  1. Non-forfeiture options and tables of non-forfeiture
  2. Protection from creditors
  3. Insurance of minors
  4. Impact of divorce
  5. Assignment
51
Q

What is the difference between an absolute assignment and a collateral assignment?

A

They both refer to the transfer of policy owner. Absolute assignment is general, collateral is specific to a financial institution as security for a loan.

52
Q

What are the 6 provisions that must be in a disability income policy?

A
  1. Name of the insured
  2. Amount of benefit, and conditions for payment
  3. Amount of premium
  4. Grace period
  5. Conditions for reinstatement
  6. The term of insurance (beginning/ending dates of coverage)
53
Q

What are the 7 exclusions that may be in a disability policy?

A
  1. Sickness caused by normal pregnancy
  2. Accident arising from war
  3. Injury while commiting crime
  4. Self-harm
  5. Extended foreign travel/foreign residency
  6. Air travel other than commercial
  7. AIDS-related sickness, drug/alcohol dependency, mental/nervous disorders
54
Q

What are the 8 provisions that must be in a health insurance policy?

A
  1. Incontestability of the contract
  2. Renewal
  3. Grace period
  4. Pre-existing conditions
  5. Claims
  6. Physical examination
  7. Change of occupation
  8. Overinsurance
55
Q

What are the 4 duties of an agent when delivering an A&S policy?

A
  1. Confirm accuracy of policy
  2. Confirm no material changes have occurred
  3. Review policy with policy owner
  4. Obtain policy receipt

LLQP (18 decks)

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