Life 2 Flashcards
Nonforfeiture values
– benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
Decreasing term
Decreasing term coverage is commonly purchased to insure the payment of a mortgage or other debts if the insured dies prematurely.
Limited pay whole life
limited-pay whole life is designed so that the premiums for coverage will be completely paid-up well before age 100
Single premium whole life (SPWL)
Single premium whole life (SPWL) is designed to provide a level death benefit to the insured’s age 100 for a one-time, lump-sum payment
Cash value
d. The cash value, also called nonforfeiture value, does not usually accumulate until the third policy year and it grows tax deferred.
Universal life
Universal life insurance is also known by the generic name of flexible premium adjustable life. That implies that the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again
2 components of universal life
universal life policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annually renewable term insurances
Withdrawals on universal life policies
Universal life policies allow the partial withdrawal (partial surrender) of the policy cash value….
During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation, depending upon the plan. The death benefit will be reduced by the amount of any partial surrender
Variable life
is a level, fixed premium, investment-based product….
The cash value of the policy, however, is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer.
Variable Universal Life
insurance that combines many features of the whole life with the flexible premium of universal life and the investment component of variable life, making it a securities version of the universal life insurance.
Agents selling variable life insurance products must:
Agents selling variable life insurance products must:
Be registered with FINRA;
Have a securities license; and
Be licensed by the state to sell life insurance.
Indexed life
Indexed Life
The main feature of indexed whole life (or equity index whole life) insurance is that the cash value is dependent upon the performance of the equity index, such as S&P 500 although there is a guaranteed minimum interest rate. The policy’s face amount increases annually to keep pace with inflation
Joint life
Joint life is a single policy that is designed to insure two or more lives. Joint life policies can be in the form of term insurance or permanent insurance…..
premium is based on a joint average age that is between the ages of the insureds.
The death benefit is paid upon the first death only.
Survivorship Life
Survivorship Life
Survivorship life (also referred to as “second-to-die” or “last survivor” policy) insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death
Annuity
annuity is a contract that provides income for a specified period of years, or for life. An annuity protects a person against outliving his or her money. Annuities are not life insurance, but rather a vehicle for the accumulation of money and the liquidation of an estate…..
payments stop upon the death of the annuitant
Owner of annuity
The owner of an annuity may be a corporation, trust, or other legal entity.
Annuitant
Annuitant – The person who receives benefits or payments from the annuity, whose life expectancy is taken into consideration, and for whom the annuity is written….must be a natural person
Why are annuities purchased?
they are also purchased to fund or to help fund a college education.
provide or supplement retirement income
Payment methods for annuities
An immediate annuity is one that is purchased with a single, lump-sum payment and provides income payments that start within one year from the date of purchase
Can illustrations be altered
An illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list nonguaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent…..
The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited pay life
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.
