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Life Insurance > Life Insurance exam > Flashcards

Life Insurance exam Flashcards

1
Q

What is the purest form of term insurance

A

Annually renewable term

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2
Q

What are the benefits of a annually renewable term insurance policy

A

You don’t not need to prove insurability.

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3
Q

What happens to the premium in an annually renewable term insurance policy

A

The premium will go up because it is based on the applicants current age.

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4
Q

What are the two types of annuities ?

A

Immediate and differed

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5
Q

In what situation would an increasing term policy be beneficial

A

When trying to keep up with inflation

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6
Q

When would a deceasing term policy be used ?

A

Typically when paying off a debt (maybe to a bank for example)

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7
Q

What are the 3 types of term insurance

A

Level, increasing , decreasing

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8
Q

What special feature di term policies have ?

A

They are usually renewable and convertible: renewable and convertible

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9
Q

Benefits in a policy that can never be lost

A

Non forfeiture values

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10
Q

What are special features offered by whole life policies that are not offered by term life ?

A

Cash value ,

Non forfeiture options, policy loans

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11
Q

What is adjustable life insurance ?

A

Best of both worlds. Can be term or Increase or decrease the premium or the premium-paying period;
Increase or decrease the face amount; or
Change the period of protection life.

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12
Q

True / false

In adjustable policy, the policy owner can convert to policy from term to whole life and vise versa.

A

True

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13
Q

In adjustable life policy , what may be required for changing the death benefit or type of premium

A

Proof of insurability

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14
Q

Give an example of when proof of Insurabilty may be needed for an adjustable life policy.

A

When changing the death benefit from 100k to 200k (I crease in death benefit) or when converting the premium payment

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15
Q

How does cash value accumulate to an adjustable term policy ?

A

Cash value only accumulated after the premiums paid cost more than the policy b

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16
Q

Flexible premium adjustable life =

A

Universal life

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17
Q

the amount needed to keep the policy in force for the current year.

A

Minimum premium (universal life)

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18
Q

Two ways insurers provide policy owners of universal life policies to pay

A

Minimum premium and target premium

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19
Q

Which payment method in universal life products ensures a policy will not lapse due to non payment

A

Target premium

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20
Q

Target premium

A

recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

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21
Q

This type of policy is interest sensitive

A

Universal life

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22
Q

In this type of policy, the owner is guaranteed a contract interest rate but may also be given a current interest rate that is not guaranteed and dependent on market conditions. a

A

Universal life

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23
Q

Two components of universal life policy

A

Insurance and cash value

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24
Q

The insurance on universal policies are ____________

A

Annually renewable

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25
Q

Level death benefit option

A

A

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26
Q

Universal life offers options a & B. True or false

A

True

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27
Q

Increasing death benefit option

A

B

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28
Q

a level, fixed premium, investment-based product.

A

Variable life insurance

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29
Q

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. The policyowner bears the investment risk in variable contracts.

A

Variable insurance

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30
Q

What stays level in variable insurance

A

Death benefit and premium

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31
Q

Who bears the risk in variable life

A

Policy owner

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32
Q

type of 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.

A

Variable universal life

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33
Q

Mix between whole life and variable life

A

Variable universal life

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34
Q

Agents selling variable life insurance products mus

A

Be registered with FINR

Be licensed by the state to sell life insurance and have a securities license

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35
Q

What is the difference between universal life and universal variable life

A

Universal life guarantees cash value

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36
Q

True/false :

Joint life policies are only Available as whole life

A

False. Can be whole life or term

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37
Q

Jon and Mary are a married couple who both earn the same
Amount of income. Jon and Mary want to protect themselves and their mortgage when one of them passes. They are looking for a way to supplement the income of the other without spending too much money. Which product would best fit their need ?

A

Joint life policy

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38
Q

This type of policy works well for business partners in a buy sell agreement

A

Joint policy

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39
Q

This type of policy is usually use to off set estate tax

A

Survivorship life

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40
Q

A type of whole life policy that has a different maturity date

A

Endowment policy

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41
Q

Premiums in an endowment policy tend to be ______ than regular whole life

A

Higher

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42
Q

Prevents someone from

Out living their mowyv

A

Annuity

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43
Q

contract that provides income for a specified period of years, or for life.

A

Annuity

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44
Q

Pay in period of annuity

A

Accumulation period

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45
Q

Paid out of annuity

A

Annuization period

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46
Q

What is the annuity income

Based on

A

Age and gender
Interest rate
Amount of premium paid or cash value accumulated
Frequency of payment

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47
Q

Annuity income is based on what 4 factors

A

Annuitants age and gender

  1. Interest
  2. Payments made in
  3. Frequency of payments
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48
Q

When would a beneficiary receive any type of payment upon death of the annuitant

A

If the annuitant dies during the accumulation period.

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49
Q

What is the purpose of an annuity

A

To make sure someone does not out live their money

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50
Q

What type of policy creates cash value the fastest ?

A

Endowment

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51
Q

Is an endowment policy a type of whole life policy or term

A

Whole life because it has a cash value

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52
Q

The sooner a policy endows the _____ premium will be

A

Higher

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53
Q

3 classifications of annuities

A

How they are paid into , how premiums are invest , and how premiums are paid out

54
Q

What is a disadvantage if fixed annuities

A

Inflation

55
Q

This type of annuity protects the annuitant against inflation

A

Variable annuity

56
Q

3 main characteristics of variable annuities

A
  1. Underlying investment
  2. Interest rate.
  3. License requirement
57
Q

What are differences between variable and fixed annuities

A

Fixed has a gaurentee income and interest rate. Fixed annuities are held in insurance general account and variables are not. The license required for a variable license is the life insurance and securities.

58
Q

Fixed annuities that invest aggressively

A

Equity index annuity

59
Q

Which is more risky - a variable annuity or equity annuity

A

Variable

60
Q

What is a similarity between equity annuity and fixed ?

A

Both have guaranteed interest

61
Q

True or false : annuities can be used on a tax deferred basis for educational funds

A

True

62
Q

Characteristics of a contract

A

Provisions

63
Q

Modify characteristics of a contract

A

Riders

64
Q

Ways to invest / distribute money in a life insurance policy

A

Options

65
Q

Who creates provisions ?

A

NAIC

66
Q

What 4 things constitute an entire policy ?

A

Policy application , the policy, riders and amendments

67
Q

How long is the free look period ?

A

10 days

68
Q

When does the free look period begin

A

Once policy is delivered

69
Q

Who are the 4 parties to an insurance contract

A

Insurer , policy owner, insured, beneficiary

70
Q

Who has ownership rights on a policy ?

A

The policy owner

71
Q

What is an assignment

A

When a policy owner gives up rights and assigns the policy a new owner

72
Q

What are the two types of assignments

A
  1. Absolute assignment 2. Collateral assignment
73
Q

This type of policy assignment is usually temporary

A

Collateral

74
Q

In a absolute assignment , does the new policy owner have to have insurable interest in the insured

A

No

75
Q

Does a beneficiary need to be named to make a policy valid ?

A

No

76
Q

What are the different types of riders

A
  1. Disability riders
  2. Accelerated living benefits
  3. Riders covering additional insured
  4. Riders affecting death benefit amount
77
Q

What are the 4 disability riders and describe them

A
  1. waiver or premium. This rider allows the premiums of a policy to be waived if the insured becomes disabled. There is a waiting period of 6 months.
  2. Waiver of cost of insurance. This is specific to universities life policies it does not waive premiums needed to accumulate cash values.
  3. Waiver of premium with income. This waived premium on a policy and provides an income for the insured if they become disabled.
  4. Payor benefit. Usually found on juvenile policies which states if the parent dies or becomes disabled , the premiums will be waived until the age of 21.
78
Q

This is a type of policy rider which the insurer will not charge additional premium for

A

Living needs rider (under accelerated living benefits rider)

79
Q

This rider provides coverage for one or more persons other than the insured

A

Other insured rider

80
Q

Other insured rider is also known as

A

Family rider

81
Q

What is a spouse rider

A

When the insured adds their spouse as someone to be covered in a policy. It is for a limited amount of time (usually until 65)

82
Q

What is children term rider

A

Temporary insurance on children until a certain age. Usually convertible without showing evidence of insurability

83
Q

How is a children rider charged to the policy ownwr

A

One premium. Does not increase or decrease with addition of children.

84
Q

This type of rider incorporates the spouse term rider and children term rider

A

Family rider. Level term insurance.

85
Q

Are there riders which provide coverage for non family members ?

A

Yes

86
Q

What are riders that affect the death benefit ? 3 of them

A
  1. Accidental death
  2. Accidental death and dismemberment
    (Ad&d)
  3. Guaranteed insurability
87
Q

Within what time period must and insured die as a result of an accidental death in order for the accidental death rider to pay out ?

A

90 days

88
Q

Until what age is the accidental death rider valid ?

A

65

89
Q

How much does the accidental death rider usually pay out ?

A

2 or 3 times the face amount

90
Q

This rider pays out the face amount for death or a capital sum for dismemberment

A

Ad&d rider

91
Q

When can the full face amount be paid out in dismemberment

A

When the insured loses 2 arms or 2 legs

92
Q

A rider which allows an insurer to purchase insurance at future dates without evidence of insurability

A

Guaranteed insurability

93
Q

Is an additional premium charged for gaurenteed insurabmilty

A

Yes

94
Q

When does guaranteed insurability rider usually expire

A

Age 40

95
Q

This rider is based on increasing term insurance

It provides that if the insured dies before a certain age they are entitled to the face amount and premiums paid

A

return of premium rider

96
Q

When does return of premium rider option expire

A

Age 60

97
Q

This type of rider is usually attached to a whole life policy and gives higher protection at a reduced cost

A

Term rider

98
Q

This rider addresses inflation by increasing insurance without evidence of insurability based on CPI

A

Cost of living rider

99
Q

What are the 3 categories of policy options

A

Non forefeitire

Dividends and settlement options

100
Q

What are the 3 nonforgeitjre options

A

Cash surrender, reduced paid up insurance and extended term

101
Q

When the insured trades policy for cash value

A

No forfeiture option “cash value surrender”

102
Q

Is cash value surrender taxed ?

A

Any amount recieved more than premiums paid is taxable

103
Q

Can someone who receives the cash value non forefiture option reinstate

A

No

104
Q

A non forfeiture options which allows the insured to purchase a permant policy that builds its own cash value with a reduced face amount

A

Reduced paid up option

105
Q

Using the cash value to convert to term insurance with the same face amount is what no forfeiture option

A

Extended term

106
Q

How long does extended term policy usually go for

A

Whatever the cash value pays

107
Q

Which no nforfeitjre option will be automatically chosen if the policy owner does no pick

A

Extended term

108
Q

Are dividends taxable ?

A

No

109
Q

What are the 6 dividend options

A
  1. Cash
  2. Reduced premium
    3 accumulation at interest
  3. Paid up additions
  4. Paid up option
  5. One year term insurance
110
Q

This is a type of settlement option which is also known as straight life

A

Life income option

111
Q

What is the life income option

A

Offers income to the beneficiary for their life.

112
Q

If the beneficiary of life income option does before the total amount is paid , what happens

A

It is forfeited to the insurer

113
Q

The more guarantees in life income

Option means the installments are ______

A

Smaller

114
Q

Provides income for recipient for a guaranteed number of years and lifetime

A

Lifetime with period certain

115
Q

This option is temporary option

A

Interest only option

116
Q

This option allows the recipient to receive payments for a certain number of years. Payments will continue to a beneficiary even after recipients death

A

Fixed period

117
Q

What is the difference Xd between life income with period certain and fixed period

A

Life income with period certain stops payments after recipients death where fixed period continued payments to a beneficiary. It does not however provide income for life

118
Q

This options pays a specific amount

A

Fixed amount

119
Q

Who appoints the commissioner of banking and insurance

A

The govenor

120
Q

The commissioner has many responsibilities and obligations. What is something they can’t do

A

he Commissioner may not have ownership of, interest in, or any transactions in any capacity with any financial institution or insurance company licensed or regulated by the Department, except in the strict performance of the Commissioner’s duties.

121
Q

Who approves policies and forms ?

A

The commissioner

122
Q

Who supervises insurance business

A

The commissioner

123
Q

Who deals with licensing

A

Commissioner

124
Q

Who enforced insurance laws and penalties for violations

A

The commissioner

125
Q

Who conducts investigations examinations and hearings

A

Commissioner

126
Q

What is the penalty for unfair trade practice

A

Up to 1,000 dollars

127
Q

Willfully violating u fair trade laws will result in what fine

A

$5,000 per charge

128
Q

Violating a Seis and disist order will result in what fine

A

A fine up to 5,000 dollars

129
Q

Violation of insurance law or regulation is penalty or

A

Up to 5k first offense and up to 10k for subsequent

130
Q

What just a surplus lines agent have

A

Be resident of New Jersey

Hold properly and casualty license

Life Insurance (1 decks)

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