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Life Insurance > Know This > Flashcards

Know This Flashcards

1
Q

Whole Life insurance

A

Provides lifetime (permanent) protection and accumulates cash value.

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2
Q

Variable contracts

A

The policyowner bears the investment risk (assets in a separate account)

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3
Q

Premium rates on joint life Policy

A

Are determined by averaging the ages of both insureds.

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4
Q

Joint Life =

A

First to die; survivorship life =second to die (last survivor)

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5
Q

Insured skips a premium payment on a universal lie policy

A

The missing premium may be deducted from the policy’s cash value. The policy will not lapse.

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6
Q

“Level” in level insurance

A

Refers to the death benefit, which does not change

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7
Q

Term insurance

A

A) provides the greatest amount of coverage for the lowest premium.
B) has no cash value.

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8
Q

Annuities are based on

A

The life expectancy of the annuitant, the annuitant must be a natural person, regardless of who owns the policy.

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9
Q

During the accumulation period

A

Funds are not paid into the annuity. During the annuity period, funds are paid out to the annuitant.

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10
Q

Shorter life expectancy

A

= higher benefit; longer life expectancy = lower benefit.

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11
Q

An immediate annuity

A

Is purchased with a single premium

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12
Q

Income payments from a deferred annuity

A

Begin sometime after 1 year from the date of purchase.

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13
Q

In fixed annuities

A

The premiums are deposited in the company’s general account

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14
Q

Pure life annuity

A

Provides the highest monthly benefit, but there is no guarantee that the entire principal will be paid out

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15
Q

The fixed -period option

A

Pays for a specific time only, whether the annuitant is living

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16
Q

The main use of annuities

A

Is to provide retirement income

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17
Q

Entire contract

A

= policy + copy of application + any riders of amendments

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18
Q

Absolute assignment is

A

Complete and permanent transfer of ownership right; collateral assignment is the partial and temporary transfer of rights.

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19
Q

No beneficiary is named

A

The policy proceeds go to the insured’s estate.

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20
Q

Common disaster clause

A

Protects the contingent beneficiary

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21
Q

Grace Periods

A

Protect the policyholders from losing insurance coverage if they are late on a premium payment

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22
Q

Misstatement of age

A

On the application will result in adjustment of premium or benefits.

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23
Q

Policy loans

A

Are only available in policies that have cash value (whole life)

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24
Q

Wavier of premium rider

A

Waives the premium for a total disability after a waiting period.

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25
Q

Children’s term rider

A

One premium for all children

26
Q

Nonforfeiture options

A

Are triggered by policy surrender or lapse.

Available options

  • Reduced paid-up
  • Extended term (automatic)
  • Cash
27
Q

Extended term

A

Is the automatic nonforfeiture option: same face amount, shorter term of coverage.

28
Q

Dividends

A

Are a return of excess premiums: therefore, not taxable when paid to the policyowner

29
Q

Settlement options

A

Are triggered by the insured’s death or age 100

Available options

  • Cash
  • Reduction of premium
  • Accumulation at interest
  • Paid-up Additions (automatic)
  • Paid-up Insurance
  • One-year Term
30
Q

Under life-income (straight life) settlement option

A

The recipient cannot outlive the benefit payments.

31
Q

Indemnity

A

Means insureds cannot recover more than their loss

32
Q

Representations

A

Are statements believed to be true. Insured’s statements on the application are representations.

33
Q

Insurer’s consideration

A

Is the promise to pay for the losses; insured’s consideration is the payment of premium and statements on the application.

34
Q

A Life insurance Producer

A

Is the company’s field underwriter.

35
Q

Conditional receipt means

A

The applicant may be covered as early as the date of the application.

36
Q

An insurance application

A

Is the key source underwriters use for information about the applicant.

37
Q

No premium

A

No coverage

38
Q

Group insurance is

A

Written as annually renewable term insurance

39
Q

In group insurance

A

The master contract is the employer and certificates of the insurance are for individual insureds.

40
Q

When converting from group life

A

To individual life insurance, evidence of insurability is not required

41
Q

Credit life insurance

A

Cannot pay out more than the balance of the debt.

42
Q

Lump-sum

A

Cash payment of life policy proceeds are tax-free for the beneficiary

43
Q

Qualified plans

A

Have tax advantages

44
Q

Traditional IRA and Roth IRA

A

Are for individuals with earned income

45
Q

Contributions to a traditional IRA

A

Are with pre-tax dollars(tax-deductible); Contributions to a Roth IRA are with after-tax dollars (not tax-deductible)

46
Q

Traditional IRA

A

Distributions are taxable; Roth IRA distributions are NOT taxable.

47
Q

403 (b)

A

Plans are for nonprofits and public-school systems.

48
Q

Contributions

A

To qualified plans are limited to a maximum amount (establish by IRS)

49
Q

Domicile refers

A

To the location where an insurer is incorporated; not necessarily where the insurer conducts business.

50
Q

Restricted license

A

A foreign military sales agent representing a life insurance company in North Carolina.

51
Q

Pretext interviews

A

1) Pretends to be someone else
2) pretends to represent a person he or she is not, in fact, representing.
3) Misrepresent the true purpose of the interview; or
4) Refuses to identify him or herself upon request.

52
Q

Misrepresentation

A

Issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, or the payment of dividends.

53
Q

Rebating

A

Any inducement offered to the insured in the sale of insurance products that is not specified in the policy.

54
Q

Twisting

A

A misrepresentation persuades an insured/owner to his or her detriment to cancel, lapse, or switch policies from one to another

55
Q

False advertising

A

Advertisements cannot include any untrue, deceptive, or misleading statement that apply to the business of insurance or anyone who conducts it.

56
Q

Defamation

A

An unfair trade practice in which one agent or insurer makes an injurious statement about with the intent of harming the person’s or company’s reputation.

57
Q

coercion

A

An unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance.

58
Q

Broker

A

An individual who represents an insured in the process of purchasing and negotiating a contract of insurance.

59
Q

Agent

A

An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.

60
Q

Dividend Options

A

Available options

  • Cash * Reduction of Premium
  • accumulation at Interest
  • Paid-up Additions (automatic)
  • Paid-up Insurance
  • One-year Term

Life Insurance (8 decks)

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