chapter 2

Question 1

Annually Renewable Term

Answer 1

Terms are each year, and every year that you get older the premium goes up.

Question 2

Term Insurance

Answer 2

The cheapest form of life insurance (at least to start off) - has no cash value
 There are 3 types: 
Level 
increasing (term for riders)
decreasing (term for someone in debt)

Question 3

Whole life insurance (permanent)

Answer 3

Permenant - lasts until you die.

Question 4

Whole life insurance - single premium

Answer 4

Make a lump sum and pay it all up front at the beginning of the policy. (Will have immediate cash value)

Question 5

Whole life insurance - limited pay

Answer 5

Pay a set number of years or to a specified age. (Pay every year up to age 65. Or whatever the hell age you want. Its all due to budgeting)

Question 6

Whole life insurance - straight life

Answer 6

Pay every year until death or until age 100

Question 7

Adjustable life

Answer 7

Can be either term or permanent insurance. The policyowner may adjust premium or premium payment period. This is suitable for insureds whose incomes are unpredictable

Question 8

Universal lfie

Answer 8

Every year the cash value changes based on interest rates.

Question 9

Universal life option A and option B

Answer 9

option A - you get a level death benefit

option B - increasing death benefit over time

Question 10

Variable life insurance

Answer 10

Was created due to a booming stock market. In order to sell it, need to have life license and securities registration. An investment of life insurance and mutual funds. (Cash value is going to go up and down based on stock market)

Question 11

Whole life vs variable life recap

Answer 11

Whole life - Guaranteed death benefit and living benefits (cash value in general account) (Insurance company bears the risk on investing)

Variable - Separate accounts. Insured bears the risk on insurance rates

Question 12

Joint life

Answer 12

Able to cover more than 2 people on a life policy. They use an average age. Death benefit pays out whenever the first person dies.

Question 13

Surviorship life

Answer 13

Also covering 2 people. Using average age. Death benefit does not pay out until the last survivor dies.

Question 14

Group Life

Answer 14

The group has to have a reason to exist (Most often group is an employee/employer benefit)

Insureds receive certificates of insurance. The group sponsor (usually the employer) gets the master policy

Group underwriting is beneifical to people who may be sick or have bad health because pretty much everyone is able to get this.

Question 15

Group conversion

Answer 15

What happens when you get group life insurance but then leave the company? If you were with the group plan for over 5, you can convert to a whole life plan. Has to be whole life.

Question 16

Annuity basics?

Answer 16

It protects annuitants against outliving their money.

Question 17

Life insurance vs annuities

Answer 17

Life - risk of dying too soon. Pays the death benefit at death
Annuities - risk of living too long

Question 18

Immediate Annuity

Answer 18

Means you put a big large sump of money in. And within a year you go from accumulation to annuization

Question 19

Fixed annuity vs variable annuity

Answer 19

Fixed is a stated interest rate that will grow it. A variable is riskier and has underlying investments.

Question 20

Suitability in annuity

Answer 20

Annuity recommendations must be suitable based on information from the applicant. As an agent, you need to know the financial situation, tax status, and their investment objections

Question 21

Annuity settlement options: Life only, refund life annuity, and life with period certain

Answer 21

Life only - you will get paid out until you die. No questions asked
Refund life annuity - If life expectancy is 80 and you RIP at 77, the 3 years of payment will go to your spouse (or beneficiary)
Life with period certain - As long as you live insurance company will pay you. There is beneficiary protection, but only to a specified amount of years. (if it is a 10 year plan and you RIP at year 12 the ole wife doesn’t get any bread)