2 Video Flashcards
Who is the beneficiary
the person or entity that receives the federal income tax-free benefit upon the insured’s death
What are major reasons people purchase Life Insurance (Personal Only)
- Survivor Protection
- Estate Creation
- Estate Conservation
- Cash Accumulation
- Liquidity
Explain Survivor Protection
Protect people you are leaving behind so they can move forward with their lives (tax-free)
Explain Estate Creation
You created beneficiary (tax-free) an estate for them. They now have has assets
Explain Estate Conservation
Beneficiary conserves/saves the money depending on what they want to do with the asset.
Explain cash accumulation
Certain policies allow you to use a savings portion. You pay over the premium, which grows the cash value. Whoever the owner of the policy is, they can access the cash value throughout their life.
Explain Liquidity
Ability to access cash value (in cash accumulation). You are taking some asset of some kind and be able to turn it into cash quickly. (Think like crypto wallet or bank)
What are the major reasons people buy Life insurance? (Business Only)
Key-Person Insurance
Buy-Sell Agreements
Executive Bonuses
What is a Buy-Sell Agreement?
a legal contract that determines what will be done with a business in the event the owner dies/disabled.
What is a Buy-Sell Agreement also known as?
business continuation agreement
What are the different types of Buy-Sell Agreements used for partners ships and corporations
Cross Purchase
Entity Purchase
Stock Purchase
Stock Redemption
Process of Issuing an Insurance Policy
- Soliticiation and Sales Presentations
- Underwriting: Field and Company
- Premium Determination
- Policy Issue and Delivery
What is Step 2 of Issuing an Insurance Policy?
Underwriting: Field and Company
(Risk Selection and Classification)
(Standard, Substandard, Preferred)
What is Step 4 on Issuing an Insurance Policy (last step)
Policy Issue and Delivery
What is Step 3 on Issuing an Insurance Policy?
Premium Determination (applicant is insurable, they need to establish an appropriate policy premium)
What is Step 1 on Issuing an Insurance Policy?
Soliticiation and Sales Presentations
Buyer’s Guide is and does what?
- Generic information about insurance policies
- Helps compare policies
- Basic info about similar policies
- Cost Comparison for similar policies
When is the Buyer’s Guide usually provided?
At the time of application
Policy Summary (Illustration/Hypo/Hypotheical) is and does what?
- Specific Information about policy being issued
- Will include the premium, each rider, living benefits, insurance company name, policy name
- The agent’s information
When is the Policy Summary usually provided?
at the time of policy delivery (or prior to)
Primary criteria considered for risk selection.
- Health
- Occupation
- Lifestyle
- Hobbies/Habits
What are the 3 Parts of the Application?
Part 1. Genereal Information
Part 2. Medical Information
+agents report
What are the required signatures on an application:
- Agent
- Applicant
(owner if not the applicant)
If the client calls the agent to change something, can you as the agent do that?
No. The application is already signed. You need to have them do them cross off the wrong info, initial it, and then write the correct info.
What are the consequences of incomplete applications?
If not, they send it back to the agent to get the lack of information. If they issue policy anyway, the insurance company can never go back and will not put themselves at risk.
What is the acronym APS?
Attending Physician Statement
What is the Attending Physician Statement?
the underwriter sees answers to certain questions that could indicate greater risk, and the underwriter wants to obtain specific medical details, the underwriter will request a statement from the applicant’s physician .
- helps determine the likelihood of claims
- less expensive than a medical exam
Medical Information Bureau
- nonprofit trade organization compromised of member insurance companies
- stores and shares medical information among member insurers
- helps uncover misrepresentations and prevent concealment
- adverse medical information from MIB cannot be the sole reason for denial of coverage (not only source)
Investigative consumer report
similar to consumer reports, but additional information is obtained through an investigation and interviews with associates, friends, or neighbors of the insured.
When must the consumer be advised in writing about the report
within 3 days of the request
an inspection report from an independent, investigating firm (or credit agency) covers what?
Financial and Moral Information such as
Credit, character, employment records, hobbies, habits
When undergoing/requesting HIV Consent, what are the two documents required
- Say “We may run an HIV/AIDS test. You request your permission if we deem it to be necessary.”
- Filled by the applicant with doctor’s information, in case of a positive result.
If tested positive for HIV what is the procedure?
The insurance company takes the information of the Medical doctor of the applicant, the medical professional will talk to them about the results of the test.
Is requiring an HIV test unfair discrimination?
No, as long as the conditions are met:
- testing is required of all individuals in the same class
- proposed insured is not denied coverage solely on the basis of such testing (other reason and sometimes test is a false positive)
- approved by the FDA and otherwise comply with applicable state and federal laws.
Premium Receipt
type of receipt issued when premiums are collected with the application
Delivery Receipt
an agent obtains this when they hand-deliver an individual policy or annuity to the policy owner.
Conditional Receipt
The most common type of receipt
- Only used when the applicant submits a prepaid application. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam (occurs last)
- as long as approved by the underwriters.
3 Types of Risk (classification)
Preferred: Reduced risk of loss, covered reduced rate
Standard: average exposure, covered standard rate
Substandard: increased risk of loss, covered at an increased rate. We can still make you an offer
-(option) Decline a risk: too high of a risk, and not covered
Modes of Premium Payment
Annual
Semi-Annual
Quarterly
Monthly
How does higher frequency mean higher premium?
they incur additional billing charges and extra monthly fees to process the checks
After the agent delivers the policy to the insured, what must they obtain (not deliver)
- The premium check (not gathered at the time of application.
- Statement of (continuing) good health and that it has not changed since the process of underwriting.
*then you hand them the policy
Policy Backdating
-to lower premium based on the insured’s age
-no more than 6 months
The premium must be paid from the effective date of coverage
