Chapter 2 Life Basics Flashcards
What part of the application contains general questions about the applicant
IE: Sex/Gender, marital status, residence, date of birth, occupation, and past/present life insurance
Part I
What part of the application contains questions pertaining to medical background, past, and present health, any medical visits, hospitalizations, or surgeries in recent years, medical status of immediate family members, including their ages and causes of death
Part II
_____ ________ _______ is the process of selection, classification and rating, and determining if someone is insurable.
Home office underwriting
A life insurance policy specifically intended for the death benefit to be used to cover estate taxes
Estate Conservation
______ policies are the only policies that may pay dividends to policyowners.
Participating
_____ loading is a cost area that can vary from company to company based on its operations and efficiency. These factors are used by all insurers.
Expense
When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would:
Increase- to offset the lost interest earnings and increased administration costs.
Insured’s age on the policy issue date
Issue (Original) Age
Insured’s age at any point in time, typically used at renewal or conversion
Attained Age
____ ______ ______ is any type of life insurance that is not group, industrial, or government insurance.
Ordinary Life Insurance
The primary purpose of ____ _____ ____ is to collect adverse medical information about an applicants health and act as an information exchange.
Medical Information Bureau (MIB)
Individuals who have the same health, habits, sex/gender, and occupational characteristics as those reflected in the mortality table. Individuals in this category have an average life expectancy
Standard Risks
Individuals who meet certain requirements and qualify for lower premiums because of ideal health, height, weight. Individuals in this category have a longer than average life expectancy
Preferred Risks
Individuals who are not acceptable at standard rates because of poor health, bad habits or occupational hazards. Individuals in this policy are issued rated policies that are known as surcharges
Substandard Risks (Higher Risk Exposure)
Initially only the premium would be refunded in case of death. The death benefit increases over time with the full face amount eventually payable. Generally used with Senior Life insurance plans to provide minimal benefits without a medical examination
Graded (Lien) Plan
Rates an insured at older than actual age
Rated-Up Age
Constant dollar amount added to the standard rate per $1000 of coverage.
IE: Student Pilot
Flat Rate
A surcharge is calculated using a table showing past claims history of individuals with similar impairments
Tabular Rate
What is the equation for how premium is calculated for Life Insurance?
Mortality-Interest+Expenses=Total Premium paid to the insurer
Reflects frequency of payment
Mode
When are premium payments made?
Monthly, Quarterly, Semiannually, or Annually
Additional Charges (expenses) are added to the net premium rate to enable an insurer to meet all costs under the contract Mortality-Interest+Expenses= \_\_\_\_\_\_\_\_\_
Gross premium
Takes into account interest and mortality
Mortality-Interest=___________
Net Premium
An insurance planned normally owned by an employer, creditor or association, under which coverage is provided for the employees, debtors, or members
Group
Any type of life insurance that is not a group, industrial, or government insurance. This is the larger portion of the life insurance policies in force today
Ordinary Life Insurance
Also known as debit life insurance and makes up only about .03% of the life insurance today
Industrial (Home Service)
A life insurance policy that remains in force to age 100 or beyond. Premium is always higher than that on a term policy. This policy provides for living benefits for the policyowner/insured by the way of its cash values
Permanent
Lowest of initial premium outlay and designed for someone with a large insurance need but with limited cash flow. Often referred to as temporary coverage. Does not build cash value. Typically used to cover mortgages, short term obligations, or for younger couples with one or more children
Term
Class of policy marketed by a mutually owned company. A dividend may be paid to the policyowner when they are declared by the board of directors
Participating
Policy marketed by a stock insurer. Do not have to be a stockholder to be a policyholder
Non-Participating
Provides more flexibility in terms of premiums, investment objectives and other policy benefits.
IE: Universal and Variable Universal Life policies
Flexible
A _____ ______ is used for a policy requested when the applicant’s age, medical history or amount of coverage does not require a medical examination for underwriting. Health questions on the application are asked by the producer and are the only medical information required.
Nonmedical Application
