Life Insurance Basics

Question 1

What is cash value?

Answer 1

equity accumulated in permanent life insurance.

Question 2

what is an estate?

Answer 2

a persons net worth.

Question 3

what is an illustration?

Answer 3

presentation or depiction of non guarenteed elements of a life insurance policy aka policy summary.

Question 4

what is liquidation?

Answer 4

selling assets in order to raise capital.

Question 5

what is lump sum?

Answer 5

payment of entire benefits in one lump sum.

Question 6

what is solvency?

Answer 6

ability to meet financial obligations.

Question 7

what is insurable interest?

Answer 7

probability of losing money or something of value in the event of a loss.

Question 8

what are the personal uses of life insurance?

Answer 8

1. survivor protection
2. estate
3. cash accumulation
4. liquidity
5. estate conversion

Question 9

What are the approaches to determining amount of personal life insurance?

Answer 9

1. human life value

2. needs approach

Question 10

what is human life approach?

Answer 10

gives estimate based on income, inflation, number of years till retirement, and the time value of money.

Question 11

what is needs approach?

Answer 11

predicted based on the needs of the family.

Question 12

What is a buy sell agreement?

Answer 12

legal contract that explains what will be done with the business in the event than an owner dies or becomes disabled.

Question 13

What is key person insurance?

Answer 13

take out insurance to cover the loss of a key employee.

Question 14

what is term insurance?

Answer 14

covered for a specifed number of time. Also known as pure life insurance.

Question 15

What is permanent life insurance?

Answer 15

remain in effect till age 100

Question 16

what is fixed life insurance or annuities.

Answer 16

offer guarenteed minimum or fixed benefits.

Question 17

what is variable insurance?

Answer 17

cash value accumulates based upon a specfic portfolio of stocks.

Question 18

What is premium payment mode?

Answer 18

frequency in which the policy owner pays the premium.

Question 19

What is solication?

Answer 19

attempt to persuade someone to buy an insurance policy.

Question 20

How long must copies of an illustartion must be held onto after a policy is no longer enforce?

Answer 20

3 years.

Question 21

What is a policy summary?

Answer 21

written statement descrbining features and elements of a policy being issued. AKA illustration.

Question 22

What is a buyers guide?

Answer 22

provides basic general information about insurance policies.

Question 23

waht is conservation?

Answer 23

atteempt made by the existing insuer to dissuade a current policy owner from the replacement of a life insurance policy or annuity.

Question 24

what is existing insurer?

Answer 24

insurance company whose policy or contract will be changed or affected in a manner or described within the definition of replacement.

Question 25

What is existing policy or contract?

Answer 25

means an indviudal life insurance plicy or annuity contract in force.

Question 26

What is replacing insurer?

Answer 26

insurance company that isues or proposes to issue a new policy or contract that replaces an existing policy.

Question 27

what is conditional receipt?

Answer 27

states coverage will start on the date of the application or medical exam which ever comes last.

Question 28

what are the parts of an application?

Answer 28

1. general information
2. medical information
3. agents reports

Question 29

what is an attending physcian statement (APS)

Answer 29

gives medical history information on applicant.

Question 30

What is premium receipt?

Answer 30

receit issued when premiums are collected with the application.