Life Insurance Basics Flashcards
Which risk classification would require the lowest premium
Preferred risk
Has a lower than normal risk of premature death and will pay a lower than standard premium.
What action is preferred when the agent makes a mistake when completing the application
Void the application and start a new one
In some instances it is allowed to draw a line through the wrong answer and write in the new one with the agent and applicant initial the change
In the life insurance field, “insurable interest” must exist when?
At the time application is made for the insurance (or when the policy takes effect)
Insurable interest must exist in life insurance only at the time of application, after that it no longer has to be proven
Can be the owner and insured be the same person?
Yes, The applicant and owner and also be the insured at the same time
What is a Viatical Settlement
In a viatical settlement transaction, a terminally ill insured sells their policy to a 3rd party- the viatical settlement provider, for a large percentage of the policy’s face. The viatical settlement provider becomes the new owner and receives the face amount upon the insured’s death. Remember, insurabe interest only needs to be proven when the policy is originally issued
What is the document the underwriter may require at delivery for a policy that was issued with an insufficient premium?
Statement of good health
If the policy is isswith an insufficient premium, the underwriter will require payment of the premium due and a state of Good Health for the policy to be in force
When is a condition receipt effective?
Once an insurer determines a person is insurable and that the entire consideration has been received. If the policy is approved as applied for the policy effective date would be the date of application or the date of any medical exam, whichever comes later
Who makes up Life and Accident & Health Insurance Guaranty Association in SC
All licensed LA&H insured in SC are and must remain members of the Association
Most common approach for “rating” life insurance applicants who are deemed to be substandard risk?
Substandard or below standard risk pose a risk to the insurer, so these risk will be charges a higher premium to account for the extra risk
Constructive delivery
When dropped in the mail it’s considered constructively delivered
Occurs when policy is delivered without any amendments or requirements.
Living benefits
° Loan-values
° Retirement income
° Cash withdrawals
Last expenses or final expenses are not Living benefits
With regards to life insurance policies, loading refers to what?
Loading or expense Loading is assigning each policy’s share of the company’s operating expenses.
