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Insurance > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

Which settlement option indicated the beneficiary is most concerned with receiving income for a specific period of time?

A

Fixed period

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2
Q

What is the name of the individual who sells her policy to a VSP?

A

A viator

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3
Q

T/F: Double or triple indemnity may be used to describe the AD&D death benefit.

A

T

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4
Q

T/F: Interest earned on dividend left with the insurer to accumulate is not taxable.

A

F

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5
Q

Accelerated benefits often require the insured to be _____________, with a life expectancy of ___ to ____ months

A

Terminally Ill; 12; 24

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6
Q

Policies sold to a VSP are said to have gone through_______________.

A

Viatication

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7
Q

T/F: A portion of the benefit provided by either fixed amount or fixed period will be taxable interest.

A

T

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8
Q

Once the VSP buys a contract, it is responsible for future ____________.

A

Premium payments

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9
Q

Who negotiated a VSP purchase?

A

A Viatical Settlement Broker

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10
Q

Upon disability, a life insurer may waive the premium obligation after _____ months of disability.

A

6

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11
Q

For the principal benefit to be paid under an AD&D policy, death must occur within _____ days following the accident.

A

90

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12
Q

In a Universal Life Insurance policy, what is the waiver of premium provision called?

A

The waiver of cost provision

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13
Q

What settlement option uses all or a portion of the death benefit to provide an income for life?

A

The Life Income Option

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14
Q

The AD&D rider is generally ____________ because it only protects against __________________.

A

Inexpensive; accidental losses

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15
Q

What dividend option provides the greatest additional amount of death benefit protection for a limited period?

A

The one year term option

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16
Q

Are death benefits taxable when received by the beneficiary?

A

No. Death benefits are not taxable

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17
Q

What nonforfeiture option continues to provide permanent insurance protection in a smaller face amount?

A

The paid up permanent insurance option

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18
Q

T/F: Waiver means a voluntary abandonment of an existing right.

A

T

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19
Q

What are the cash value options available to policy owners upon policy surrender?

A

Nonforfeiture options

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20
Q

Describe the paid up permanent insurance option.

A

This option provides for a smaller permanent life insurance policy requiring no further premiums.

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21
Q

Someone who has a very short life expectancy can expect a larger or smaller purchase price when selling to a VSP?

A

Larger

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22
Q

What did idea option provided an additional benefit for a limited period of time?

A

The one year term option

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23
Q

What rider uses an increasing term policy rider to pay an additional death benefit equal to the base policy’s existing cash value?

A

The return of cash value rider

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24
Q

If a person is disabled, life insurance premiums are waived once the insured is totally disabled for _____ months.

A

6

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25
Q

What is another name for the death benefit on an AD&D policy?

A

The principal sum or amount

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26
Q

What is a stranger originated life insurance policy (STOLI)?

A

A policy that is purchased by a third party with no insurable interest in the insured

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27
Q

What is the tax treatment upon policy surrender?

A

Upon policy surrender, the cash value that exceeds total premiums paid would be considered taxable

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28
Q

Hat type of insurance is used to provide dependent coverage using a family term rider?

A

Level term insurance

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29
Q

What additional rider increases the life insurance death benefit by an amount equal to the total policy premiums paid?

A

The return of premium rider

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30
Q

Dividends are paid to policy holders of a ___________ company.

A

Mutual

31
Q

If the premium pay or dies, premiums on a child’s policy may be waived until the child reaches age ____.

A

21

32
Q

Name the three nonforfeiture benefits.

A

Surrender for cash, extended level term, and reduced paid up permanent insurance

33
Q

T/F: A time limit exists to purchase additional life protection without required evidence of insurability.

A

T; the guaranteed insurability (GI) rider usually limits this to age 40 or 50.

34
Q

If someone has any paid up permanent additions, what is payable upon death?

A

The paid up permanent additions, in addition to the death benefit on the original policy

35
Q

A family term rider is added to a policy issued to the family ____________.

A

Breadwinner

36
Q

Benefits received through the accelerated benefits rider will _______ the future death benefit.

A

Reduce

37
Q

What is the limitation to an accidental death rider?

A

It only pays for accidental death

38
Q

Settlement options may be selected by _______________, but altered by a ___________ upon death of the ____________.

A

Policyowners; beneficiary; insured

39
Q

Which option is more flexible — fixed period or fixed amount?

A

Fixed amount

40
Q

What nonforfeiture option continues to provide an identical amount of insurance protection for a limited period?

A

The extended level term option

41
Q

Identify the acronym: AD & D

A

Accidental Death and Dismemberment

42
Q

What rider increases the death benefit to offset an increase in the CPI?

A

The Cost of Living Adjustment (COLA) rider

43
Q

Dividends are considered a return of _________ premium, and are not __________ when returned to policyowners.

A

Overpaid; taxable

44
Q

Identify the acronym: VSP

A

Viatical Settlement Provider

45
Q

What name is synonymous for the waiver of premium rider in a UL policy?

A

The cost of insurance rider

46
Q

Benefits received from an accelerated benefit are not taxable if the insured is ____________.

A

Terminally Ill

47
Q

Dividend paid on life insurance policies are received ________ and are never ____________.

A

Tax-free; guaranteed

48
Q

What rider is added to a policy and will provide a term insurance death benefit on the spouse or children?

A

A dependent rider

49
Q

When a policy is sold to a VSP, who becomes the new policy owner?

A

The VAP is the new policy owner and beneficiary

50
Q

Which settlement option allows interest to be paid on all of the retained benefit?

A

The interest only option

51
Q

What is the result of a life settlement?

A

A policy owner sells his existing life insurance policy to a third party

52
Q

T/F: If an insurer is to retain the death benefit, an interest rate will be paid on these assets.

A

T

53
Q

If ______________, the proceeds received from a VSP sale are received tax-free.

A

Terminally Ill

54
Q

This dividend option is used to gradually increase the overall death benefit as a possible inflation offset.

A

The paid up permanent additions option

55
Q

What is probably the simplest and most common settlement option used?

A

Cash or lump sum payment

56
Q

Is the waiver of premium rider optional or mandatory?

A

Optional. The waiver of premium rider must be added at time of application by paying an additional premium

57
Q

The sale of a policy to a VSP may affect a persons eligibility for ________ assistance.

A

Public

58
Q

In a life settlement, which party remains the same after the actual transfer of ownership occurs?

A

The insured party remains the same

59
Q

What does the guaranteed insurability rider allow?

A

It allows additional coverage to be purchased without the insured having to prove they are insurable

60
Q

What is another name for the accelerated benefits rider?

A

The living needs rider.

61
Q

The payor rider is added to a _______ policy for an additional __________.

A

Child’s; premium

62
Q

Name the six dividend options.

A

Cash, reduced premiums, accumulate at interest, paid up permanent additions, paid up option, and one year term.

63
Q

What type of assignment is used when selling a policy to a VSP?

A

Absolute assignment

64
Q

When does the settlement option become available to the beneficiary?

A

Upon the death of the insured

65
Q

What is the name of the company that purchases existing life insurance policies from an existing policyowner?

A

VSP

66
Q

What nonforfeiture option continues to provide an identical death benefit upon policy surrender?

A

The extended level term option

67
Q

If disabled, the waiver of premiums still allows for ____________ growth.

A

Cash value

68
Q

What is the surrender for cash benefit?

A

A nonforfeiture option whereby the owner surrenders the policy for its cash value

69
Q

Requiring an additional premium, riders added to a life insurance policy must be purchased _______________.

A

At the time of application

70
Q

An accelerated benefit may provide for ____________ of the insured is confined to a nursing home.

A

Long term care

71
Q

What are the advantages of selling a contract to a VSP?

A

A larger living benefit and being free from federal taxes

72
Q

Premium rates for additional insurance purchased under the GI rider are based on an insureds ________ or ________ age.

A

Attained; actual

73
Q

Insurance policy dividends are received _________, while interest earned on dividend is _____________.

A

Tax-free; taxable

74
Q

Which settlement option indicates the beneficiary is most concerned with receiving a specific monthly dollar amount?

A

Fixed amount

Insurance (10 decks)

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