4- Insurance Planning Flashcards
What is the insurance policy payout during the grace period?
payout=death benefit- any missed payments
what is the minimum coverage amount in QC, NS, All other provinces?
QC: $50,000
NS: $500,000
AOP: $200,000
What is the 4 non forfeiture options
C-A-RE
- Cash Surrender Value: surrender the policy and receive your fair share
- Automatic Premium loan: if you miss a premium the insurer will automatically lend it to you by using the cash value as collateral. Upon death whatever is loaned will be paid back with interest
- Reduced Paid-Up Insurance: premiums are eliminated, coverage is reduced, new coverage is permanent
- Extended Term Insurance: premiums eliminated, coverage remains the same
What are the 5 Provincial Medical Insurance Standards?
Public Administration: must be administered on a nonprofit basis
Comprehensiveness: must cover all necessary hospital and medical services or surgical dental services provided in the hospital
Accessibility: all residents must have reasonable access
Universally: every legal resident of the province is entitled
Portability: coverage must be portable in every province and the services need to be available or required if needed
What is the difference between type 1 and type 2 liability insurance
Type 1: applies to injuries and or damages occurring during the term
Type 2: Claims reported during the term. Known as ‘claims made’, used for professionally liable insurance
What is a disability agreement and how does it differ from a disability buyout?
Disability Agreement: a healthy person will buy out a disabled partner’s share of the business after a prolonged disability
the agreement is just a contract written up by a lawyer, the buyout is is policy that would provide the funds
What can the insurance company do with the dividends?
- Premium Reduction: apply dividends to the next payment
- Cash: send dividends as a cheque
- Leave on Deposit: leave in a bank account to earn interest
- Term Addition: will purchase term insurance
- Paid-up addition: used as a one time premium to buy as much insurance as possible
What is a child term rider
a ‘rider’ is an option that can be added to a policy. A child term is a cheap option as the likelihood of a child dying is very low.
- provide minimal coverage (pay a funeral expense)
- coverage to 25 (varies)
- once the child reached the majority age in the policy, they can convert into an individual plan. They would not need to provide evidence of insurability however the premiums would be based on their age
What are the following terms Indemnity Contract Valued Contract Aleatory Contract Unilateral Contract Insurable Interest
Indemnity Contract: the amount a policy would pay out is not stated because it depends on the amount of loss (other than life insurance)
Valued Contract: the amount of the death benefit is known in advance
Aleatory Contract: The amount of consideration is not equal
Unilateral Contact: The insured can only cancel, insurer is bound to the contract per the terms and conditions
Insurable Interest: life insurance is not a gamble, you cant just buy it on someone because you think they are going to die
What are the 2 provisions specific to group insurance contracts?
- Certificate of Insurance
- the group is the policy holder however members will receive a certificate of insurance - Termination or Replacement Provisions
- what will happen if the group cancels, or the employee leaves
What is presumptive disability?
Loss of Speech Loss of Hearing Total and permanent blindness Loss of 2 limbs Presumptive disability is the insured is totally and permanently disabled
What are the Homeowner Insurance coverages?
Building itself: 80% Detached Structures: 10% Personal Property: 60-70% Additional Living Expenses: 20% Liability: 500K-1M
What is the difference between and Exempt Policy and an Non-Exempt Policy?
Exempt Policy: The savings or investment build up is usually not subject to income tax
Non-Exempt Policy: The degree of savings or investment portion exceeds a certain limit in relation to the amount of insurance protection
What is Accident Basis and Occurrence Basis?
Accident Basis: the injury or damage is due to an event that is sudden, unintended and unexpected
Occurrence Basis: the damage can occur over a period of time but still must be unintentional and unexpected
What items should be considered when doing a life insurance needs analysis?
S-E-E-M F-I-T S- Special Bequest E- Emergency Fund E- Education Fund M- Mortgage
F- Final Expenses
I- Income for surviving dependents
T- Taxes
