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Xcel Life Insurance > insurance live class deck > Flashcards

insurance live class deck Flashcards

1
Q

most companies stop writing policies at

A

85

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2
Q

the ability to change existing term policy from term to permanent policy without providing medical insurability

A

convertibility

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3
Q

cash value will equal face amount at age

A

100

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4
Q

insurance contracts: universal life insurance

A

flexibility- flexible premium adjustable life

partial CV withdrawals are allowed no loan needed to access CV
combo of a annually renewable term and cash value fund
guraranteed minimum rate
2 death benefits
1.level death benefit
2.level death benefit plus cash value

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5
Q

joint life (first to die)

A

2 or more ppl under one contract
when the first dies the death benefit is paid to to the beneficiary (or other person under contract)

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6
Q

survivorship life (second last to die)

A

covers estate taxes over 12.06 mil
death benefit payable after last person die
no benefit payable on death of first person only last person
face amounts exceed 1mil

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7
Q

juvenile life insurance

A

3 party contract
parent is the owner child is insured when

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8
Q

jumping juevenille

A

when child comes of age………..

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9
Q

variable life

A

has the same characteristics of ordinary whole life with one extinct difference

premiums are level and take a portion of premium and put it into a sub account to get invested

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10
Q

separate account

A

regulate as a mutual fund by the SEC according to the investment company act of 1940
-annual premiums are fixed(variable whole life)
-guaranteed minimum death benefit
-no guarantee regarding cash value because money is being invested

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11
Q

variable universal life

A

a universal life policy with the ability to invest in stocks, bonds, the most flexible of all life

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12
Q

where does the life insurance policy go if there is no primary, contingent or tertiary

A

goes to the estate, if there is no will

if trust is established it avoids lawyer and legal fees.

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13
Q

spendthrift provision

A

protects beneficiary from creditors
creditors cannot attache lien against death benefits left with insurer
lump sum benefits are not protected

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14
Q

crappo is used to remember policy loan rights

A

false

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15
Q

the death benefit must be paid to a family member

A

false

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16
Q

the insurer may not always pay the death benefit

A

true

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17
Q

a policyholder may sell their policy back to the insurance company

A

false

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18
Q

key employee

A

compensate business due to death (disability) of key employee
-who is a key employee–someone critical to operation of business
cannot be business owner
provides funds that are needed to offset loss or hire replacement
thrid party contract-insurable interest?
premiums are not deductible;benefit is tax free

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19
Q

business continuation “buy-sell”

A

using life insurance, provides for business continuation in the event of a partners death

-makes money avaialable to purcahse interests of deceased partners beneficiaries
-pre-arranged purchase price; contractual agreement to sell

of owners= # of policies needed

cross purchase plan- # of partners -1x # of partners = # of policies

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20
Q

two-party contract (between employer and insurer)

A

employer receives master contract
employee receives certificate of coverage

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21
Q

premium payment group insurance concepts

A

non contributory-employer pas all premium must cover 100% of employees
contributory-employee pas all or part of premium and must cover 75% employees

employer is owner and retains all ownership rights except
–right to change beneficiary

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22
Q

group insurance coverage is more liberal underwriting than individual

A

group as a whole is evaluated, generally no individual underwriting.
good risks outweigh bad risks (adverse selection)
impariments are covered
enrollment period

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23
Q

group insurance-law of large

A

easier to predict losses with greater accuracy with larger group
individuals cannot form a group with the sole purpose of obtaining group insurance; must be a common bond

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24
Q

group insurance-conversion option

A

within 31 days without proof of insurability
death benefits are provided during 31 day period paid by group plan
term to whole life-attained age
no medical exam or health questions

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25
annuity--living too long
an anuuity is account/investment vehicle established by and insurance company which allows for the tax-deferred growth of the contributions during the accumulation period --a person invest funds on either a lump sun or periodic basis and can either immediate or deferred -may contracts guarantee that the owner will not run out of money in retiremnet even if the funds are exhausted (when a lifetime payout is chosen)
26
immediate annuity
purchased in one lump sun with the payout generally starting immediately
27
deferred annuitiy
purchased with period payments and payout typically starts after retirement
28
annuities
a contract that provides income for a fixed period or an annuitants lifetime systematic liquidation of an estate or pool of money -product sold by life insurance -protection against outliving ones income -savings program-future income
29
fixed annuity
pre determine monthly income for life general assets account interest rate guarantee limits policy owner risk insurer assumes the risk
30
variable annuity
monthly benefit varies per performance separate accounts consisting of stocks and bonds higher potnetial return- no guarantee policyowner assumes the risk requires FINRA SERIES 6 OR 7 registration to sell
31
annuities is paid
lump sum or periodic (level or flexible)
32
when do annuities benefits begin?
immediate -first payments begin in 30 days of deposit only as a lump sum deferred -defer paterments to later date (retirement)
33
annuity life with period certain
income for life, with survivor benefit if annuitant dies before end of term or designated period 5, 10, 15, 20
34
straight life or pure life anuity
income for life with no refund to survivor no survivorship greatest risk to anuitants beneficiary largest monthly income greatest potential overall benefit
35
annuity- unit refund life annuity
annuitant receives an amount at least equal to his original investment at death any remaining amount is paid to beneficiary
36
joint life annuity
payment to two or more annuitants which ceases on death of either party
37
joint and survivor
payment to two or more annuitants payment continues to surveyor often at a reduced amount 75% (take a life insurance policy instead )
38
equity indexed annuity
allows for stock market appreciation with downside protection less risk for the insured guaranteed 3% regardless of market performance indexing method -llinked to an equity index participation rate -percentage of the index "gain" that is kept by contract holder with remainder kept by insurer (90/10)
39
can there be more than one recipient of an annuity payment
yes according to the number of lives on annuity
40
is a variable annuity owner guaranteed against a loss
no. variable annuities are subject to market risks
41
are lump sum deposits required to be made to purchase an annuity?
no. premium payments may be periodic contributions
42
tax treatments of life products-life insurance is considered a personal expense
death benefit is received income tax free cash value -grows tax-differed -upon surrender, not taxable unles the cash value exceeds the premiums paid (cost basis) then only the excess is taxable -cost basis consists of premiums paid for base policy only and not premiums paid for riders
43
dividends
considered a return of overpaid premium and are not taxable interest earned is taxable
44
loan interest
not a taxable event
45
settlement options
when death benefits are left with an insurer, interest is paid on the proceeds the interest is taxable
46
MEC (MODIFIED ENDOWNMENT CONTRACT)
not good to have a mic -premiums paid are not in proportion to death benefit provided -an mec is an irs classification of an insurance contract -seven pay test- if the premiums paid in during thr frist seven years exceed the net level premium that should have been paid is a mec -once a life insurance policy becomes a mec it stays- all withdrawls are taxable -if taken out prior to 59 1/2 additional 10% penalty applies -advantages Death benefit remains income tax free and the cash value growth is tax deferred until withdrawn ((things to note. have the person over contribute right before it qualifys as a mec and have them pay 4% tax vs 31% tax in the stock market)
47
taxation of group life insurance
-employer paid premiums are tax deductible as a business expense -death benefit is received tax free - cost of first 50K group life is tax exempt to employee -if coverage exceeds 50K will be taxable as ordinary income
48
1035 exchange
IRS allow a tax free exchange of insurance product for another like kind -life insurance for another or endownment for annuity -endowmnet policy for another endowment or annuity annuity for annuity ANNUITY CANNOT BE EXCHANGED FOR LIFE INSURANCE POLICY
49
1035
individual for whom the exchange is being made must benefit from at least some characteristics of the new product -improve credit rate of new issuer -better returns on the new product -improved benefits on the new product cash proceeds should not be received on the exchange the exchange should be compelted within 60 days
50
the premiums paid for a life insurance policy are
non deductible
51
the cash value in excess of cost basis is ______ if a whole life policy is surrendered
taxable
52
interest paid on death benefits that are not distributed as a lump sum is
taxable
53
death benefits on a life insurance policy are ________ in the deceased estate
included
54
a loan taken on a modified endowment contract is
taxable
55
the death benefit on a group life insurance policy is
tax free
56
a 1035 exchange allows a __________exchange of a life insurance product for another like kind
tax free
57
employee retirement income security act of 1974 (ERISA)
created to prevent missuse and mismanagement of pension plan funds rules apply to private sector defined benefit and defined contribution plans earnings are tax defered usually -plans can not be discriminatory -an approved vesting schedule must be followed -specifies the percentage of employers contribution to which the employee is entitled when withdrawing formt he plan -employees are 100% vested in their own contributions
58
primary insurance amount-via
full retirement benefit at full retirement age averaged indexed monthly earning determines what was contributed versus income payment
59
pure risk
insurable chance of loss only
60
speculative rish
chance of gain or loss (lottery ticket)
61
peril
what caused the loss (life insurance, death of insured) insurance spreads the risk and reduce the financial uncertainty assiciated with loss
62
RISK MANAGEMENT STARR
RISK SHARING-owning car get in car accident and pay deductible TRANSFER-reinsurance company where risk is transferred to other companies; ex 25% is owned by one company, 25% antoher and writing company has 50% of risk AVOIDANCE-exclusion clauses (hazerdos activities, pilot, military) REDUCTION-ex homeowners insurance limits water damage to 10K RETERNTION-ex more good risk tha bad
63
adverse selection
selection not in favor of insurance compnay tendency of poorer risks to actively seek insurance coverage
64
the law of large number will prevent losses
false
65
a contract of indeminity transfers losses
true
66
a hazard is a way for the insurer to avoid risk
false
67
insurable interest
in order to purchase insurance on a person the owner must posses an insurable interest in that person based on financial relationship -must exist at applicaiton -not required to exist at time loss occurs -insured must be made aware of the purchase by signing the app -an individual has an unrestricted/unlimited insurable interst in herself. the amount of insurance is limited by underwriting ex. I want life policy on me so ken is taken care of. 10M policy underwriting would examine if ken would lose 10M if I dies
68
admitted and authorized insurers
licensed in that state cert of authority
69
domestic carrier
carrier that has home office in which the state they are authorized to sell insurance ex mass mutual in state of mass
70
foreign
another state than home state ex mass mutual with office in Connecticut
71
alien
home office in another country that sells insurance in the state ex sunlife of Canada
72
mutual companies
owned by policy holders, insurance dividends
73
reinsurance
insurance purchased by insurance companie transwer of risk
74
faculative reinsurance
individual agreements on a case by case basis
75
automatic ready
automatic acceptance of a portion of risk
76
concept of agency
the relationship that exists between two parties, when one party acts on behalf of another ex agent/producer reps a particular insurer agency is referred to as the pricipal while the agent is authorized rep
77
actual or expressed contract
actual powers an agent has that are defined in their contract ex agent has expressed authorit to rep company and receive commissions
78
implied
usual and customary business practices that may not specifically be listed in contract
79
apparant
authroity that the public perceives an agent to have
80
agreement
offer and acceptance
81
consideration
the lawful exchange of one value for another application info+premium=coverage
82
legal capacity
bothparties must be legally competent to enter into contract
83
legal purpose
sale cannotbe contradictory to the good of public
84
aleatory contract (unequal)
a contract that may or may not provide more in benefits than premiums ex buys life insurance and dies 3 months later will 250K payout
85
contract of adhesion (non negotiable)
a contract drawn up by one part (the insurer) take it or leave it ex car insurances
86
unilateral contract
a legal agreement in which only one of the two parties needs to act to make the contract enforceable
87
conditional contract
terms specifying obligations of an insured to keep a policy in force
88
personal contract
89
valued contract (non negotiable)
pay a stated sum regardless of the actual loss incurred (life insurance)
90
indemnity contract
pay an amount equal to loss
91
utmost good faith
both parties act with honesty and integrity
92
fiduciary
financial responsibility position of trust
93
representations
anything answered on application statment that is true to the best of the applicants knowledge or belief can be changed prior to policy issue not after
94
warranty
statment made by the insurer that is guaranteed
95
misrepresentation
a flase statment that will not affect underwriting is not material will not effect issue ex mailing address error
96
material misrepresentation
a false statment or concealment that is important to the issuance of a policy and affects policy issue ex health statments, drug abuse, driving habits etc
97
concealment
failure to voluntarily disclose material facts relevant to underwriting process
98
fraud
intentional deception ex filing false claim
99
HMO health maintenance orgianizations
preventative care pre paid premium enrollee members small co pay most are closed panel plans
99
blue cross blue shield
blue cross=hospital benefits blueshield=pysicians
100
preferred provider organization (PPO)
enters into contractural agreement with hospital and doctors does not provide treatment directly pop creates preferred provider arrangments with hospitals in exchange for a discounted cost -employees will pay a lower deductible -can go outside pop will pay higher cost -ppo can choose any doctor within network
101
champus (tricare)
government organization that provides health care benefits for dependents of military personnel
102
a replacement health insurance policy will cover all aliments
no
103
tricare and champus can be used as a replacement for any individual
no only military personnel
104
health insurance will pay for UCR medical bills
yes usual customary reasonable medical bill are covered
105
health insurance policies-disability
provides income if the insured become disabled and becomes unable to earn paycheck
106
". " medical expense insurance
pay hospital and doctor bills resulting from injurt and illness
107
disability income
inability to perform your own normal occupation or daily duties -any occupational the inability to perfrom any gainful occupation -more iberal definition more expensive the premium
108
presumptive disability
a type of total and permanent disability based on loss of sight hearing speech and loss of limb paid despite the fact the insured is still working paid as Lump sun
109
loss of earning test
disability income based on earned not unearned ex commisions bonuses vs rental income interest investments
110
partial disability
the inability to perform some but not alll of your duties -follows a period of total disability added a s a rider and pays 50% of disability benefit
111
residual disability
another form of partial based on percentage of lost income fluctuates monthyl
112
recurrent disability
no elination period to get benefits if after 6 months a new disability and a new elemination period is issued
113
elimination waiting period
period preceding each disability during which benefits are not paid common elimniation 230/60/90 days longer the elinination the cheaper
114
115

Xcel Life Insurance (32 decks)

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