Insurance Contracts 4% Flashcards
accumulation units - VA
-the build during deferred period
Annuitant’s investment objective with a VA
lifetime income that will likely keep up with inflation
annuity unit - VA
number of units per payment period
Straight-life annuity (life only of Life income)
- highest periodic payment
- carries most risk
- if annuitant dies, that’s it
Life annuity with period certain
- if annuitant dies during period certain, beneficiary receives payments for remainder of period
- once period is over, annuitant continues to receive till passing
Period Certain (fixed period)
-if annuitant dies during period certain, beneficiary receives payments for remainder of period
Unit refund life annuity
- periodic payments during annuitant’s lifetime
- if annuitant dies prior to receiving an amount equal to the value of the annuity units, the remaining portion will be paid in a lump sum or installments to the beneficiary
Joint and last survivor life annuity
-payments are made to 2 people. if one annuitant dies, payments continue to the surviving annuitant.
mortality guarantee
- the insurance company deducts a mortality expense risk fee from the separate account to protect itself against an annuitant outliving their expected mortality
- co guarantees that it will make payments as long as the annuitant lives through the mortality guarantee
expense guarantee
-establishes the max that they can charge the contract
operating expense risk fee
deducted from the separate account to protect the company against rising operating expenses
Death Benefit
will receive the greater of the gross payments or accumulated value
Exchange Privilege - 1035
- life insurance to another life insurance contract
- life insurance contract to an annuity
- an endowment contract to an annuity contract
- an annuity contract to an annuity contract
Variable Life - Loans
- insurance co must allow a min of 75% of cash value after the policy has been in force for 3 years
- if the remaining cash value goes negative, the policy holder has 31 days to pay back enough of the loan to bring the value of the contract positive
Conversion Privilege - Variable Life
-must allow conversion to another policy, wl or ul, for the first 2 years without having the insured provide any additional evidence of insurability
Sales Charge and Expenses - Variable Life
- max sales charge is 9% computed over 20 years
- free look period is 45 days
- during the first year, the max sales charge is 50% of the premium paid
- if a policy-owner surrenders during the first 2 policy years, the owner is entitled to the NAV of their account plus a refund of any charge that exceeds 30% of the first years premium plus any charge that exceeds 10% of the second year’s premium
When is cash value usually, and when must it be calculated - variable life
-usually daily and at least monthly
death benefits - VL
- guaranteed min death benefit
- actual death benefit is determined by the performance of the separate account
- AIR - stated in the policy, if performance is greater, db is greater
- must be recalculated at least annually
