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Design & Pricing > Life Insurance > Flashcards

Life Insurance Flashcards

1
Q

Basic Group Term Life

Types of Plans

A
  • Flat Dollar
  • Multiple of Earnings
  • Salary Bracket
  • Position (Insurance amount based on EE category)
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2
Q

Basic Group Term Life

Eligibility Provisions

A
  • FTE
  • Actively-at-Work
  • Evidence of insurability
  • Minimum participation
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3
Q

Basic Group Term Life

Continuity of Coverage and Conversion Rights

A

Insured’s right to convert group term insurance to individual policy upon termination of employment

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4
Q

Basic Group Term Life

Disability Provisions (List and Define)

A
  • Waiver of Premium: coverage continues w/o premium when EE is disabled
  • Total and Permanent Disability: Monthly benefit (Reduces DB)
  • Extended Death Benefit: DB payable if coverage terms and EE is disabled and dies within 1 year
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5
Q

Basic Group Term Life

Benefit Payment Provisions: Settlement Options

A
  • Lump sum
  • Monthly installment
  • Money Market-like account
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6
Q

Basic Group Term Life

Federal Income Tax: Employers

A

ER-paid premium = deductible on ER’s income tax

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7
Q

Basic Group Term Life

Federal Income Tax: Beneficiary

A

Benefits received are excluded from beneficiary’s gross income

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8
Q

Basic Group Term Life

Federal Income Tax: Employee

A
  • US = Imputed Income on amounts above $50k
  • Canada = All ER life insurance payments are taxable
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9
Q

Basic Group Term Life

Federal Regulations

A
  • ERISA
  • ADEA = protects against age discrimination
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10
Q

Basic Group Term Life

State Regulations

A
  • No individual selection of face amount
  • Maximum EE contribution
  • Minimum participation
  • NAIC model laws
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11
Q

Group Supplemental Life

Definition and Types

A
  • Definition: EE-pay-all additional insurance that extends beyond basic group term
  • Type: Flat amount or Multiple of Earnings
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12
Q

Group Supplemental Life

Eligibility Provisions

A
  • FTE
  • Actively-at-work
  • Evidence of Insurability = more stringer than basic
  • Minimum Participation = lower than basic
  • Suicide Exclusion
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13
Q

Group Supplemental Life

Continuity of Coverage and Conversion Rights

A

Portability Provisions

  • Allow participants to continue group coverage by paying premium directly to insurer
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14
Q

Group Supplemental Life

Disability Provisions

A

Waiver of Premium only

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15
Q

Group Supplemental Life

Benefit Payment Provisions

A

Same as basic group term

  • Settlement options = lump, monthly, market account
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16
Q

Group Supplemental Life

Federal Income Tax: Beneficiary

A

Same as basic group term

  • Benefits received are excluded from beneficiary’s gross income
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17
Q

Group Supplemental Life

Federal Income Tax: Employee

A

No imputed income

18
Q

Group Supplemental Life

Federal Regulations

A

Same as basic group term

  • ERISA
  • ADEA
19
Q

Group Supplemental Life

State Regulations

A
  • No individual selection of face amount
  • Maximum EE contribution
  • Minimum participation = If basic plan meets requirements, then supp plan can be lower
  • NAIC model laws
20
Q

Group AD&D

Benefit Payment Provisions

A

Benefit amount = 100% group life amount

  • 100% of Benefit Payable if EE dies or loses multiple members
  • 50% of Benefit Payable if EE loses single member
21
Q

Group AD&D

Definition and Types

A
  • Definition: companion coverage to group term life
  • Types: Non-occupational and 24-hour
22
Q

Dependent Group Life

Eligibility Provisions

A

Same as health coverage

23
Q

Dependent Group Life

Continuity of Coverage and Conversion Rights

A
  • Coverage only continues while EE’s group term life coverage continues
  • Conversion rights = same as EE’s
24
Q

Dependent Group Life

Benefit Payment Provisions

A
  • Benefit = Lump Sum
  • Beneficiary = EE
25
Q

Dependent Group Life

Federal Income Tax: Employee

A
  • US = Imputed income on benefit amounts over $2000
  • Canada = ER-paid amounts are taxable
26
Q

Survivor Income Benefits

Definition

A

Monthly payments to EE’s family upon EE death

27
Q

Survivor Income Benefits

Eligibility

A

Same as basic group term

  • FTE
  • Actively-at-Work
  • Evidence of insurability
  • Minimum participation
28
Q

Survivor Income Benefits

Continuity of Coverage and Conversion Rights

A

Conversion rights apply to PV(monthly survivor benefit)

29
Q

Survivor Income Benefits

Disability Provisions

A

Waiver of Premium Only

30
Q

Survivor Income Benefits

Benefit Payment Provisions + Amount

A

Amount = % of EE monthly earnings

  • Guaranteed or Maximum benefit period
  • Remarriage provisions
  • Social Security offset
  • Last Survivor provisions
31
Q

Survivor Income Benefits

Federal Income Tax: Beneficiary

A

Monthly Payment = Non-Taxable portion + Taxable interest portion

32
Q

Survivor Income Benefits

Federal Income Tax: Employee

A

Same as basic group term

  • US = Imputed Income on amounts above $50k
  • Canada = All ER life insurance payments are taxable
33
Q

Group Permanent Life

Types (List and Define)

A
  • Single-Premium Group Paid-Up Life
    • Benefit = Level DB
    • Premium = Single Premium
  • Group Ordinary Life
    • Benefit = Level DB
    • Premium = Level
  • Group Term and Paid-up Plan
    • 2 components = EE-Paid Group Paid-Up + ER-Paid Group Term
34
Q

Group Permanent Life

Continuity of Coverage and Conversion Privilege

A
  • Group Paid-Up = No continuity needed because it is fully paid
  • Group Ordinary Life = Conversion rights limited to (Face Amount - Cash Value)
35
Q

Group Permanent Life

Disability Provisions

A

Waiver of Premium Only

36
Q

Group Permanent Life

Federal Income Tax: Employee

A

US = Imputed income is calculated using conservative interest and mortality assumptions

37
Q

Group Universal Life

Definition

A

Term Life Insurance + Accumulative Interest Side Fund

38
Q

Group Universal Life

Eligibility Provisions

A

Similar to group supplemental

  • FTE
  • Actively-at-work
  • Evidence of Insurability = more stringer than basic
  • Minimum Participation = lower than basic
  • Suicide Exclusion
39
Q

Group Universal Life

Federal Income Tax: Beneficiary

A
  • Cash Surrender = taxable
  • Death Benefit = Not taxed
40
Q

Group Universal Life

Federal Income Tax: Employee

A

Favorable tax laws; Interest accumulates on tax-deferred basis

41
Q

Group Variable Universal Life

Definition

A

Same as GUL = Term Life Insurance + Accumulative Interest Side Fund

  • Equity and fixed interest investment options available to invest side fund
42
Q

Group Variable Universal Life

Statutory Considerations

A
  • Considered investment product = subject to SEC regulation
  • Limits on withdrawals and movement of funds among investment options

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