FP 2 (4)- Insurance Planning

Question 1

What is a child term rider

Answer 1

• provides minimum coverage enough to cover funeral costs
• coverage up to 25 years
• once child reaches maximum age they can convert it to an individual plan would not need to prove evidence of insurability however the premium would be based on their age at the time

Question 2

What are the following:
Unilateral Contract
Indemnity Contract
Valued Contract
Aleatory Contract

Answer 2

Unilateral Contract: only the insured can cancel

Indemnity Contract: amounts are not stated in advance, it depends on the loss

Valued Contract: the amount of death benefit is known in advance

Aleatory Contract: the amounts of consideration are not the same

Question 3

Deferred Annuity

Answer 3

Deferred Annuity: plan where the annuitant makes one or more payment contribution that earns interest

Question 4

Exempt vs Non-Exempt Policy

Answer 4

Exempt: the savings or investments that build up are not subject to income tax

Non-Exempt: the degree of savings or investment portion exceeds a certain limit and you pay tax periodically

Question 5

What is presumptive disability, and give examples

Answer 5

if the insured suffers presumptive disability the insured is considered to be totally and permanently disabled

examples: loss of speech, loss of hearing, blindness, loss of 2 limbs