Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Life & Health License > Life Insurance > Flashcards

Life Insurance Flashcards

1
Q

Peril

A

Cause of loss

Insurer agrees to cover losses covered by a specified peril

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is peril for life insurance?

A

Death

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is peril for health insurance?

A

Accidents or illness

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Law of large numbers

A

The larger the group the more accurate losses can be predicted.

Allows carriers to charge each insured a premium that polled together will cover all claims and operating costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Stock insurance companies

A

Issues non-participating or non-par policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Non-participating or non-par policies

A

Profits are paid as dividends to shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Mutual insurer

A

Owned by policyholders
Board of directors chosen by policyholders
Profits returned to policyholders as no taxable dividends
Issues participating policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Participating or par policies

A

Pay dividends to policyholders

Whole life policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Domestic

A

The state where a company has its home office

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Foreign

A

Any state other than home office state

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Alien

A

Home office is in any country other than USA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Financial strength rating

A

Report card of the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Legal contract (LACC)

A

Insurance policies are legal contracts
Legal purpose-risk transfer doesn’t violate law
Agreement-offer and acceptance
Consideration-giving something of value
Competent parties-insured age 18 and sane

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is insured consideration?

What is insurance companies consideration?

A

Insured gives info and premium

Company gives promise to pay (policy)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Adhesion

A

Contract is written by company and insured must adhere or abide by entire policy-policy itself, riders, application

If ambiguous courts will side with insured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Aleatory

A

Not equal value-small premium for large amount of coverage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Unilateral

A

Only one promise made
Company promises to pay covered loss
Insured does not promise to pay premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Conditional

A

Insured must pay premium for coverage and file a claim if a loss occurs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Representation

A

Statement that is believed to be true

All answers on application are considered to be representations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Misrepresentation

A

Representation that is actually false

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Material misrepresentation

A

Misrepresentation that has determining factor in insurer’s acceptance of the risk.
Insurer has 2 years to discover

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Underwriting

A

Process of evaluating risk to determine if it is acceptable based on established insurance company guidelines

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Changes in application

A

Must be initialed by applicant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Backdating

A

Used to save person’s age
Most state laws allow 6 months backdating
Applicant must pay any additional premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Required signatures

A

Insured
Producer/agent
Applicant or owner of policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Producers report

A

Only seen by agent and underwriter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Conditional receipt

A

Premium paid with application.
Effective on date of application or date of medical examination whichever is later.
It is the date of the application as long as the applicant is found to be insurance under the company’s standard underwriting rules.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Binding receipt

A

Temporary, 30-60 days
Not common in life insurance
Eff date is date of app

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Attending Physician’s Statement (APS)

A

Underwriter can ask current doctor to find applicant’s current medical condition and medical history

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

2 types of medical examinations

A

Paramedical-nurse

Complete physical-by insurance company doctor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Medical Information Bureau

A

Non-profit insurance trade association
Maintains underwriting info on applicants
To reduce misrepresentation and fraud

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

4 classifications of risk

A

Standard
Preferred
Substandard
Declined

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

When does COD policy become effective

A

Policy issued
Client accepts policy
Client pays
Statement of continued good health

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Statement of good health

A

Required if no premium with application

If health changed, agent can’t deliver policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Effective date of coverage

A

Conditional receipt-eff date is date of app if premium collected at the time of application
Substandard and pays additional premium-eff date is date policy issued
No receipt-eff date is policy issue date if premium paid at delivery

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Fair Credit Reporting Act

A

Third party information
Notice to applicant required
Consumers have rights and can dispute information in files
Penalty: fines max $5k and imprisonment max 1 year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Insurable Interest

A

Risk of loss: person applying for the policy must be at risk of suffering a significant loss if the insured dies. Loss may be emotional or economic.

Assumed in one’s self and relationships (spouse, children)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

When must insurable interest exist?

A

At time of application

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Survivor Protection

A

Survivors are protected financially

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Human Life Value

A

Purpose of life insurance is to replace an individual’s economic value.
Calculation: individual’s annual income X number of years until retirement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Needs Approach

A

Looks at financial situation the survivors will face.

2 categories of financial needs: cash needs and income needs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Blackout Period

A

Social Security Administration provides benefits to spouse and children until youngest turns 16 and does not resume until spouse turns 60

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Buy-Sell Funding

A

Buy-sell agreements provide for the sale of business interest at the death or disability of an owner.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Buy-Sell Entity plan

A

Purchaser of deceased owner’s business interest is the business entity.
When funded by life insurance, business entity owns policy
If business is corporation plan is called stock redemption plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Buy-Sell Cross-Purchase Plan

A 
Surviving owner(s) purchase deceased owner’s interest.
Each partner owns a policy on the lives of each other partners.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Key Person Coverage

A

Business owns, pays for, and is the beneficiary of the policy on the key person’s life. Insurance proceeds used to offset direct financial losses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Individual Life Insurance Plans

A

Individual always gets policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Group Life Insurance Plans

A

Individual never gets policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Premium Elements

A

Mortality - relative frequency of death in a specific population, death rate
Interest - earnings on premium dollars btw time collected and time paid
Expenses - insurer’s operation costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Net Premium

A

Mortality - Interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Gross Premium

A

Mortality - Interest + Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Premium Payment Mode

A

Annual - lowest
Semi-annual
Quarterly
Monthly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

2 Basic Classes of Life Insurance

A

Term

Permanent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Term Insurance

A

Simplest type
Only offer death benefit
Remains in force for a specified period of time
Length is variable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Level Term

A

Death benefit is level

Premium is level for the term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Decreasing Term

A

Death benefit decreases
Premium remains level
Cheapest
Protects against debt (mortgage)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Increasing term

A

Death benefit increases
Premium increases
Used as rider on permanent cash building policy
Purpose is to have death benefit keep pace w/ inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

Return of Premium Term

A

Returns all or part of premium paid at end of term if insured is still alive.
Premium is higher than a regular term policy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

Renewability

A

Guarantees policy will renew at end of term w/o new app
3 options: 10-year, 5-year, annual (A.R.T. - Annual Renewal Term).
Death benefit remains same but premium increases at renewal based on insured’s age at renewal (attained age).
Policy expires at an age specified in the policy.
Not all term policies.

60
Q

Convertibility

A

Allows conversion from term to permanent without evidence of insurability or application.
Must be made before expiration.

61
Q

Premium for converted policy based on 2 options

A

Attained age - insured’s age at time of conversion (99% of policies)
Original age - age at time original policy, lump sum amount (down payment) is required that equals cash value of permanent policy if it was original purchased instead.

62
Q

Level Premium

A

Purpose is to make lifetime coverage affordable at older ages.
Premium does not increase even into old age.

63
Q

Fixed Premium Schedule

A

Level premium on a fixed schedule

64
Q

Fixed, Level Death Benefit

A

Fixed and level death benefit

65
Q

Cash Value

A

Reflect reserves necessary to assure payment of guaranteed death benefit

66
Q

2 Ways to Access Cash Value While Alive

A

Policy surrender
Policy loans - interest must be paid on amount borrowed, amount borrowed and interest is deducted from death benefit if not paid back before insured’s death

67
Q

Continuous Premium Whole Life

A

Premiums are same each year for duration of policy

AKA straight life or ordinary life

68
Q

Limited-Payment Whole Life

A

Allow lifetime of premiums to be paid in a shorter period of time.
Common forms: 1) 10-pay or 20-pay, 2) Life paid-up at age 65 - level installments annually.
Cash value builds up faster and interest is paid at guaranteed rate at end of premium-paying period.

69
Q

Single Premium Whole Life

A

One payment at time of purchase.

Creates immediate cash value.

70
Q

Modified Premium Whole Life

A

Lower premiums for first 3-5 years.

Premiums increase afterwards and remain level for life of policy.

71
Q

Graded Premium Life Insurance

A

Lowest initial premium.

Increases every year for 5-10 years until leveling off.

72
Q

Indeterminate Premium Whole Life

A

Premiums adjusted by company.

Has a guaranteed maximum premium.

73
Q

Interest Sensitive Whole Life

A

Cash value can increase beyond guaranteed amount.
Has a current interest rate.
Guaranteed interest rate.

74
Q

Adjustable Life Insurance

A

Options to adjust face value/death benefit, premium, premium duration, how fast cash value builds up, and length of coverage
w/o having to change policies.
Increase requires proof of insurability.

75
Q

Universal Life

A

Flexible premiums and flexible coverage.
Cash Account - premiums accumulate interest in cash value with current or guaranteed interest.
Can decrease or increase death benefit.

76
Q

2 options for Universal Life Death Benefit

A

Option A - level death benefit equal to policy’s face value, more of premium is placed in cash amount which makes cash value rise quicker.
Option B - increasing death benefit equal to face value plus cash account, cash value does not increase as quickly bc more of premium is applied to higher cost of increasing death benefit.

77
Q

Grace period

A

Universal life has 61 day grace period

Whole life has 31 day grace period

78
Q

Equity Indexed Universal Life

A

Current interest on cash account.
Up or down based on stock market index.
Account still guaranteed by the company.

79
Q

Variable Policies

A

Allow policyowner to participate in various types of options while not being taxed on the earnings until the policy is surrendered.
Life insurance plus investments.

80
Q

Separate Account

A

Fund held by company and maintained separately from the insured’s assets.
Holds premiums used to purchase funds/investments.
No guarantee on how cash value will grow b/c ins co uses securities but has scheduled premium for minimum guaranteed benefit. Can go higher if separate account does well.

81
Q

Variable Insurance Producer/Agent Registration

A

Agents must have life insurance license.

Agents must register with SEC and Financial Industry Regulatory Association (FINRA) to sell investment products.

82
Q

Variable Life

A

Has a separate account instead of guaranteed cash value.
2 guaranteed death benefit options.
Death benefit can increase of account does well.
Has guaranteed death benefit regardless of how account does.

83
Q

Variable Universal Life

A

Universal life with separate account.

No guaranteed death benefit.

84
Q

Joint Life Policies

A

Used for married couple to pay mortgage.
Used for buy-sell.
Also called first-to-die policies.
Covers 2 or more lives.

85
Q

Survivorship Policies

A

Insures 2 individuals.
Will pay when last survivor dies.
Always covers husband and wife.
Only for estate planning.

86
Q

Juvenile Policies

A

Written on life of minor or child.
Child can sign at age 16.
Death benefit may increase at future age.
Jumping Juvenile - auto death benefit increase at age 18 or 21.

87
Q

Waiver of Premium Riders

A

Pays premiums if policyholder becomes disabled.
Insured must be unable to work for certain period of time - Waiting period.
Expires between ages of 60 and 65.

88
Q

Disability Income Rider

A

Provides monthly benefit check

89
Q

Payor Benefit Rider

A

Usually found with juvenile policies.

Premiums are waived until certain age if payor of premium becomes disabled or dies.

90
Q

Accelerated Benefits Rider

A

Insured can apply for an advance on death proceeds before death.
Eligibility requires qualifying event
- terminal illness - 24 months to live
- serious illness - cancer, reduced life expectancy
- long-term care
- admittance to hospice or permanent nursing home
- catastrophic illness - organ transplant
Reduces the death benefit to beneficiary.
Disclosure must be provided to insured.

91
Q

Other (Additional) Insurance Riders

A

Provides convertible term insurance for spouse or immediate family member. Usually called spouse rider or children’s rider.
Family rider covers both spouse and children.

92
Q

Term Rider on the Insured

A

Add term insurance to permanent insurance.
3 riders available: 1) level, 2) decreasing, 3) increasing
Premium lower than a separate policy.
Limited time for rider, expires at a certain age or after a number of years.

93
Q

Accidental Death Benefit (ADB)

A

Pays extra benefit if insured dies as a result of an accident.
Death must occur within 90 days of accident.
Doubles or triples the face value.

94
Q

Accidental Death or Dismemberment Rider (AD&D)

Death Benefit

A

Principal sum is 100% of death benefit.

Paid if death is due to accident and within 90 days of accident date.

95
Q

Accidental Death or Dismemberment Rider (AD&D)

Dismemberment

A

Dismemberment - severance of feet, arms, legs, or hands; loss of sight or hearing; paralysis
Capital Sum = 50% of principal sum
Max for multiple dismemberment claims is principal sum

96
Q

Guaranteed Insurability Rider

A

Add life insurance up to a specified amount w/o proof of insurability.
Can be done:
- Between ages 25-40 at 3 year intervals.
- Life events - marriage, birth, or adoption
Cost based on insured’s attained age

97
Q

Settlement Options

A 
Lump sum
Interest income (only) option
Fixed period option
Fixed amount option
Life income option
Life only option
Life with period certain
Life with refund
Joint-and-Survivor life
98
Q

Partial Surrenders

A

Universal Life

Variable Universal Life

99
Q

Policy Dividends

A 
CARPPO - dividends are not guaranteed
Cash
Accumulation of interest
Reduced Premium
Paid Up Additions
Paid Up Insurance - abbreviating or vanishing premium
One-Year Term Insurance
100
Q

Nonforfeiture Options

Nonforfeiture clause

A

Insured receives all or a portion of benefits or a partial refund on premium paid if payments missed and policy lapses

Cash Surrender - policy is cancelled and insured receives current cash value
Reduced paid-up insurance - insured obtains a reduced paid-up whole life insurance based on attained age
Extended term insurance - net cash surrender value is used to buy term insurance policy with original death benefit based on attained age

101
Q

Free Look

A

Begins when the owner receives the policy
Usually no fewer than 10 days
Policy can be returned for a full refund

102
Q

Insuring Clause

A

Usually found on the first page of policy
Insurers promise to pay upon death
Includes the face amount
Usually signed by an officer of the company

103
Q

Ownership Rights

A 
Insured can change without consent of beneficiary
Name or change the beneficiary
Select settlement option
Borrow or withdraw policy cash values
Receive policy dividends
Surrender or cancel the policy
Assign or transfer ownership
Select/change the premium payment mode
Select a non-forfeiture option
104
Q

Policy Assignment

A

Transfer of owner’s right partial or whole

1) Collateral assignment - pledge for a loan (partial)
2) Absolute - permanent change

105
Q

Entire Contract

A

Policy plus
Copy of the application plus
Any riders or amendments (if any)

106
Q

Endorsements

A

Must be made in writing and agreed to by both insured and insurer
Must be signed by executive officer and cannot be authorized by agent
Can only be made by company
Owner can request a change

107
Q

Consideration

A

Insured’s consideration = Money

Insurer’s consideration = Promise to pay

108
Q

Grace Period

A 
If premium not paid by due date
Usually 31 days following due date
Insurance still in force
Death benefit paid minus premiums due
Universal & Variable Universal Life have 61 days grace period
109
Q

Reinstatement

A 
Policy lapsed for nonpayment of premiums
Up to three years to reinstate
Policy was not surrendered for cash
Must pay missed premiums + interest
Prove insurability
Saves original policy + issue age
Premium will stay the same
110
Q

Incontestability

A

Policy cannot be taken away usually after 2 years

Even if material misrepresentation or fraud (concealment)

111
Q

Suicide Clause

A

If insured commits suicide prior to having a policy for 2 years, only the premium will be paid back.
After 2 years the full face amount will be paid.

112
Q

Misstatement of Age

A

Incontestability clause does not apply.
Used to protect insurance company.
If insured older than application states death benefit will be reduced to correct premium amount.
If insured younger death benefit increased.

113
Q

Payment of Claims

A

Immediately

Usually no longer than 60 days

114
Q

Life Insurance Policy Provisions

A 
Free look
Insuring clause
Ownership rights
Assignment
Entire Contract
Modifications (endorsements)
Consideration
Payment of Premiums
Grace Period
Reinstatement
Incontestability provision
Misstatement of age or sex
Payment of claims
115
Q

Who can be a beneficiary?

A 
Individuals
Classes - i.e. my children, my siblings
Trusts
Minors
Estates
Charities
University/Colleges
116
Q

Multiple Beneficiaries in the Same Class

A

Default is Per Capita - divides death benefit equally, not inheritable
Per Stirpes - by branch, benefit goes to children’s children, inheritable

117
Q

Levels of Beneficiaries

A

Primary
Contingent or secondary
Tertiary
Estate of insured - if no beneficiary named or alive

118
Q

Revocable vs. Irrevocable

A

Revocable can be changed by owner at any time.

Irrevocable can’t be changed without beneficiary consent, loans or withdrawals need permission of beneficiary, becomes revocable upon death of irrevocable beneficiary.

119
Q

When does change of beneficiary take effect?

A

Date of written request

120
Q

Common Disaster Provision

A

If insured and primary beneficiary die in common accident or die within 30-60 days after accident.
Proceeds paid as if the primary beneficiary died first.
Proceeds are paid to contingent beneficiary.

121
Q

Spendthrift provisions

A

May be included in the policy.
Death benefit cannot be paid in lump sum.
Death benefit cannot be claimed by creditors before payment to beneficiary.
Death benefit cannot be pledged by the beneficiary to a creditor.
Death benefit cannot be used by beneficiary as collateral for a loan.

122
Q

Group Life Conversion

A

Convert group life to individual policy due to
Termination of employment
Employer stops plan

Must be within 31 day
Convert to individual permanent plan.
Cost based on attained age.
No medical questions.
Death during conversion is covered.
123
Q

Accumulation period

A

Pay-In phase when principal and periodic deposits grow with credited interest.
Owner can make additional premium payments or deposits.
Take withdrawals from the accumulated value.
Surrender annuity for cash value.
Make changes to contract.

124
Q

Annuitization Period

A

Pay-Out phase, money is converted to series of regular payments.
No additional premium payments can be made.
No withdrawals can be taken.
Annuity cannot be surrendered.
Owner can’t change contract.
Owner does not have to annuitize.

125
Q

Non-qualified Annuities

A

Based on growth and never on deposits.

126
Q

Immediate Annuity

A

Benefit payments began within 12 months of purchase.
Purchased with a single premium (SPIA).
Has no or short accumulation period.

127
Q

Deferred Annuity

A

Payments postponed until retirement age.
Bough with single premium (SPDA) or flexible premiums (FPDA).
Has accumulation period.
Owner decides annuitization at a later time.

128
Q

Annuity Surrender or Withdrawal

A

10% tax if withdrawn before 59.5.
Surrender period - waiting period.
Surrender fee - penalty for early withdrawal.

129
Q

Annuitization Payout Options

A

Life Only - guarantees income for life, death stops payments, largest monthly check from life options.
Life - Period Certain - income for life they live, annuitant chooses period of time.
Joint Life and Survivor - payout % and age difference b/w annuitants impacts payout.

130
Q

Factors Affecting Annuity Payment Amount

A

Age
Gender
Length of payment guarantee
Assumed interest rate

131
Q

Variable Annuities

A

Separate Account
No guarantees - owner assumes all risk
Premium buys accumulation units
If annuitized accumulated money buys annuity units

132
Q

Equity Indexed Annuities

A

Fixed annuities - guaranteed by insurer’s general account
Interest tied to stock market index
No securities license required

133
Q

Use of Annuities

A

Life income
Tax favored savings
Funding individual retirement accounts (IRA)
Education funds

134
Q

Are life insurance premium payments tax-deductible?

A

No

135
Q

Interested Earned on Cash Values

A

Tax deferred
Not taxed with in policy
Taxed if gain is withdrawn

136
Q

Full Surrenders Taxation

A

Any gain is taxable

137
Q

Taxation for Universal Life and Variable Universal Life Withdrawals

A

Taxed only if withdrawal exceeds premiums paid.

Only gain is taxed.

138
Q

Taxation of Cash Value Loans

A

Not taxed while policy is in force.
Taxed if policy is surrendered and there is a gain.
Interested paid on loans is not tax-deductible.

139
Q

Taxation of Dividends

A

Not taxed.

Interested earned is taxed.

140
Q

Taxation of Lump Sum Death Beneftis

A

Not taxable

141
Q

Taxation of Accelerated Death Benefits

A

Same tax treatment as regular death benefits (tax exempt).
Critically ill
Terminally ill
Death

142
Q

Modified Endowment Contract

A

Life policy becomes MEC if too much premium is paid in first 7 years of policy.
Can be flexible premium universal life or single premium whole life.
Interest not taxed while in policy.
Withdrawals or loans are taxed.
Interest is paid out first.
10% penalty on interest if withdrawn before age 59.5 unless insured is disabled.
Once a MEC always a MEC.

143
Q

Section 1035 Exchanges

A

Part of tax code that allows moving cash values from one contract to another without gains being taxed at that time.
Not taxable - life to life, annuity to annuity, life to annuity
Gains taxed - annuity to life bc does not eliminate surrender charge for annuity

144
Q

Required Minimum Distribution of Traditional IRAs

A

Minimum withdrawals must start at age 70.5.
First withdrawal can be delayed until April 1 of following year.
50% penalty on taxes owed if min distributions not taken.
Annual min based on owners life expectancy.

145
Q

Pension Plans

A

Defined benefit - benefits specified in plan

Defined contribution - benefit not specified, contribution is specified

146
Q

Profit Sharing

A

Contributions made by employer
Based on company profits
Contributions not made every year
Maximum contribution is 25% of total employee payroll

147
Q

Keith (HR-10)

A

Individual sole proprietor
Partnerships
Self employed individuals

Life & Health License (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions