Chapter 2, 7-10 Types of Life Ins; Business Uses; Retirement; Group Life

Question 1

Temporary life insurance for a temporary need with only a death benefit

Answer 1

Term Insurance

Question 2

life insurance product that provides protection throughout one’s “whole life” or to age 100

Answer 2

Permanent Insurance

Question 3

benefits available during the policy while the person is still alive

Answer 3

Living Benefits

Question 4

term insurance that does not change in benefit or cost over the term

Answer 4

Level Term

Question 5

term insurance where the death benefit decreases over the time

Answer 5

Decreasing Term

Question 6

Life insurance where the death benefit increases each year during a set term

Answer 6

Increasing Term (Return of Premium)

Question 7

Term insurance that can be renewed after a certain amount of time while insurability does not have to be established

Answer 7

Renewable Term

Question 8

a product that can be converted from term to permanent without proof of insurability

Answer 8

Convertible Term

Question 9

the ability to be insured

Answer 9

Insurability

Question 10

the age of the insured at a specific time period throughout the policy

Answer 10

Attained Age

Question 11

fixed premium term insurance

Answer 11

Level Premium Term

Question 12

one year term policy

Answer 12

Annually Renewable Term

Question 13

rate that is based on the date of purchase or conversion

Answer 13

Attained Age Rate

Question 14

Rate based on the original date of purchase before conversion by making up the difference between the new rate and the original rate that has been paid since the original purchase date

Answer 14

Original Age Rate

Question 15

permanent life insurance product that provides protection for one’s whole life or until age 100

Answer 15

Whole Life

Question 16

equity of a life insurance policy

Answer 16

Cash Value

Question 17

minimum interest rate guaranteed by the insurance company

Answer 17

Guaranteed Growth Rate

Question 18

the amount you have PAID IN at the time you cash out your policy

Answer 18

Cost Basis

Question 19

when you borrow money from the equity of a life policy

Answer 19

Loan

Question 20

if a loan plus interest reaches the full cash value it is considered a full what?

Answer 20

Withdrawal

Question 21

person(s) designated to receive the death benefit

Answer 21

Beneficiary

Question 22

whole life premiums paid each year until the age of 100 at a lower rate

Answer 22

Continuous Premium/Straight Life Premium

Question 23

payment into whole life for a set number of years at a higher rate per year, but still provides lifetime protection

Answer 23

Limited Pay Whole Life

Question 24

One premium payment is made into the policy to pay up the protection for life

Answer 24

Single Premium

Question 25

whole life policy that allows changes to be made without purchasing an additional policy subject to insurability

Answer 25

Adjustable Life Insurance

Question 26

whole life policy that invests the cash value in a separate account chosen by the insured subject to investment risk and sold by a dually licensed rep

Answer 26

Variable Whole Life

Question 27

FINRA

Answer 27

Financial Industry Regulatory Authority

Question 28

investment account within a whole life policy

Answer 28

Separate Account

Question 29

a form of whole life insurance in which the owner has both a flexible premium and death benefit amount

Answer 29

Universal Life

Question 30

the period of time the owner has to pay the premium payment after the policy comes due

Answer 30

Grace Period

Question 31

a change endorsement to the original policy

Answer 31

Rider

Question 32

a rider found in UL policies that maintains the policy . It waives the cost of protection being deducted each month from the cash value account in the event that the insured becomes disabled

Answer 32

Waiver of Cost Rider

Question 33

waives the premium on a policy, in the event of the insured becoming disabled

Answer 33

Waiver of Premium Rider

Question 34

UL option with level death benefit up to age 95; risk decreases as cash value increases

Answer 34

Universal Life Option A

Question 35

UL option with increasing death benefit ; risk stays constant

Answer 35

Universal Life Option B

Question 36

designed by the IRS to insure the cash value in a policy does not exceed the death benefit

Answer 36

Risk Corridor

Question 37

universal life where the insured assumes the investment risk while the cash value is invested in a separate account

Answer 37

Variable Universal Life

Question 38

a permanent policy with cash value growth, fixed premium, but the cash value account is credited with an interest rate based on the company's investment experience along with the company's guaranteed minimum

Answer 38

Interest Sensitive Whole Life

Question 39

a permanent policy that pays interest based upon the change in a particular equity index such as Dow Jones or S&P500

Answer 39

Equity Indexed Life

Question 40

a single policy intended to insured multiple lives, but only pays one death benefit (after the first insured's death)

Answer 40

Joint Life (First to Die)

Question 41

a single policy intended to insured multiple lives, but only pays on death benefit (after the last insured dies)

Answer 41

Joint and Survivor Life (Last to Die)

Question 42

a single policy that provides multiple death benefits for multiple insureds (covers each member of the family)

Answer 42

Family (Protection) Policy

Answer 43

Units

Question 44

life product that modifies the premium structure; begins with a low premium and after a period of time, increases, then levels off

Answer 44

Modified Life

Question 45

life product that modifies the premium by gradually increasing each year until it levels off after 5 years

Answer 45

Graded Premium

Question 46

a life insurance product designed to provide coverage for the life of a child

Answer 46

Juvenile Life

Question 47

rider that states if the payor (adult or parent) dies or becomes disabled, the premium will be paid up until the child is old enough to take over the premium payments

Answer 47

Payor Rider or Benefit

Question 48

rider that allows the insured to purchase additional amounts of insurance at predetermined times without proving insurability

Answer 48

Guaranteed Insurability Rider

Question 49

insurance used to pay off a debt in the event of the insured's death

Answer 49

Credit Life

Question 50

a permanent policy paid up (overfunded), in less than 7 years

Answer 50

Modified Endowment Contracts (MEC)

Question 51

test used to determine if too much money was paid in too early; if the accumulated amount paid under the contract at any time during the first seven years exceed the total net level premiums that would have been paid

Answer 51

7-Pay Test

Question 52

Life policy to protect the business if a key employee dies

Answer 52

Key Employee life policy

Question 53

A contract agreement that will state in the event of an owner's death their share will be bought for a pre-determined price and the heirs will sell their ownership for the agreed upon price.

Answer 53

Buy Sell Agreement

Question 54

a plan that allows the corporation to buy out shares of a deceased owner, often financed by life insurance to fund the sale

Answer 54

Stock Purchase Plan

Question 55

a plan where each owner has a life policy on all the other owners; at the time of death the remaining owners use the proceeds to buy out the heirs of the deceased owner

Answer 55

Cross Purchase Plan

Question 56

method used to purchase permanent insurance by an employer and employee protecting the employee and the owner if the key employee dies

Answer 56

Split Dollar Plan

Question 57

OASDI Act of 1935 funded by employers & employees

Answer 57

Old Age, Survivors, and Disability Income (Social Security)

Question 58

benefit that provides a monthly check to a retiree after reaching retirement age

Answer 58

Retirement Income

Question 59

If an individual meets the early disability requirements of SS, it is possible to qualify for this income earlier than retirement age

Answer 59

Disability Income

Question 60

Survivors who have lost their spouses may qualify for a temporary income and/or death benefit

Answer 60

Survivor Benefits

Question 61

The amount of social security a personal will receive is based on their __________________

Answer 61

Primary Insurance Amount (PIA)

Question 62

the period of time in which a survivor no longer qualifies for the survivor benefit and is not old enough to receive the retirement benefit

Answer 62

Blackout period

Question 63

A fully insured individual has worked how many quarters

Answer 63

40

Question 64

retirement plans defined by the IRS with funding limitations, participation requirements and tax advantages

Answer 64

Qualified

Question 65

retirement plan that does not get a full tax benefit

Answer 65

Non-Qualified

Question 66

3 advantages of Qualified Plans

Answer 66

Tax Deductible Business Expense Tax Deferred Contributions Tax Deferred Growth

Question 67

retirement plans that define the benefit the employee will receive upon retirement

Answer 67

Defined Benefit Plan

Question 68

retirement plan that establishes the amount the is being contributed into the plan, the end result will not be known until it is time to use the plan

Answer 68

Defined Contribution Plan

Question 69

deferred compensation plans that defer a portion of their paycheck into the retirement account

Answer 69

401K

Question 70

401K or 403b plans are sometimes referred to as

Answer 70

CODA (Cash or Deferred Arrangement)

Question 71

retirement plan for non-profit organizations

Answer 71

403b

Question 72

retirement plan for self employed (farmers, doctors, etc)

Answer 72

Keogh

Question 73

retirement plan for small or self employed that establishes separate IRAs for each employee

Answer 73

Simplified Employee Pension Plan (SEP)

Question 74

retirement plans designed for 100 or less employees that establishes separate IRA accounts for the retirement money to be deposited into

Answer 74

SIMPLE Retirement Plan

Question 75

retirement accounts established by the individual

Answer 75

IRA

Question 76

individual plan that may be deductible, grows tax deferred, subject to early withdrawal penalties and withdrawals must begin after owner is 70 1/2

Answer 76

Traditional IRA

Question 77

IRA that is post tax and the growth is tax free

Answer 77

Roth IRA

Question 78

allows the employee to move money from an employer sponsored retirement fund into an IRA within 60 days without penalty

Answer 78

Plan Roll Over

Question 79

roll over of retirement plan that omits the need for the company to send 20% to the IRS

Answer 79

Direct Transfer

Question 80

group life made up of a group of small employers from a common industry purchasing insurance through a trust

Answer 80

MET (Multiple Employer Trusts)

Question 81

group life with a made up of small employers self-insuring

Answer 81

MEWA Multiple Employer Welfare Arrangement

Question 82

allows an employee to convert group life to whole life individual policy at attained age within 31 days with guaranteed insurability

Answer 82

Life Conversion Privileges

Question 83

% of participation on contributory vs non-contributory group life

Answer 83

100% Non-Contributory 75% Contributory