Chapter 1 Hard

Question 1

Test question: what happens if you see umbrella coverage on the test?

Answer 1

You know it’s probably the right answer.

Question 2

Test question #2: how far in advance should we arrive for the class?

Answer 2

15 minutes

Question 3

Presumptive disability

Answer 3

Some policies don’t cover all losses

Some require total loss, some even cover temporary loss

Question 4

Three types of individual disability policies

Answer 4

1. modified own occupation
2. Modified any occupation
3. Split definition

Question 5

Provisions of a life insurance policy

Answer 5

1. Incontestable. After 2 years validity of contract cannot be questioned exception fraud
2. Suicide clause. No payment for suicide within 2 yrs
3. Grace period. Days allowed for premium in default

Question 6

When does beneficiary get death benefit plus cash value?

Answer 6

Universal life policy type 2/ option b

Question 7

APL provision

Answer 7

Automatic premium loan

Question 8

Reinstatement provision

Answer 8

Provides for policy to be reinstated after date of default

Question 9

What is “5th dividend”?

Answer 9

Industry language for one year term

Question 10

What is a life settlement?

Answer 10

Transaction with insured who is not terminally or chronically ill but over 65. Long-term gain. Look for the ltcg answer.

Question 11

What tax don’t death benefit beneficiaries pay?

Answer 11

Income tax

Question 12

Key employee life insurance

Answer 12

Business should be the owner and beneficiary. Premiums non-deductible, death benefits tax-free. Employee no incidents of ownership

Question 13

Key employee life insurance

Answer 13

Business should be the owner and beneficiary. Premiums non-deductible, death benefits tax-free. Employee no incidents of ownership

Question 14

What’s variable life?

Answer 14

Premium is fixed

Question 15

Possible advantages of variable life?

Answer 15

1. Cash value is not in the general account
2. Not restrictive
3. No need to be in equities

Question 16

Disability insurance policy provisions

Answer 16

1. Residual benefits Rider
2. Partial disability Rider
3. Disability waiver of premium provision
4. SIS

Question 17

Period for long-term disability

Answer 17

Two to five years or 2 to 10 years

Question 18

Typical death benefit amount

Answer 18

1. Low income 50 to 60% of earnings

2. High income 30 to 50% of earnings

Question 19

More expensive disability policy?

Answer 19

Non-cancellable, not guaranteed renewable

Question 20

What’s a PQ

Answer 20

Partnership qualified LTC policy

Question 21

MEC – LIFO or FIFO?

Answer 21

LIFO