Life Insurance Policies Flashcards
Whole life policies mature at age 100. If the owner (insured) dies at age 80, with no outstanding loans on the policy, what portion of the death benefit is paid to the beneficiary?
The full death benefit
What type of policy issues certificates of insurance to insureds?
Group policy
Regarding taxation, how does the cash value of a universal life policy accumulate?
Tax deferred
What happens to the cash value when a whole life insurance policy matures?
Cash value is paid to the policyowner
What type of premium is charged on a straight life policy?
Level premium for the life of the insured
Main advantage of converting from group to individual coverage?
Evidence of insurability isn’t required
What type of insurance policy is Life Paid-up at age 65?
Limited-pay whole life
Who owns a group life insurance contract?
The employer, also known as the sponsor of the group
Group life ins policies are written as what type of insurance?
Annually renewable term
In annually renewable term policies, what is the annual premium based on?
The insured’s attained age
What elements of an adjustable life policy can be changed by the policyowners?
The amount and payment period of the premium, the face amount, and the period for protection
What is the diff between these whole life policies: straight life, limited payment, and single premium
The premium payment mode
The policyowner of a whole life is also the insured. What age must they attain to receive the policy’s face amount?
Age 100
What type of insurance policy offers pure death protection?
Term
Who is entitled to the cash values in a LI policy?
The policyowner
Characteristics of the group that underwriters consider when issuing the group life policy?
Groups purpose, size, financial strength and turnover
In term policies what happens to the premium throughout the term of the policy?
It remains level
Universal life option that has a gradually increasing cash value and a level death benefit
Option A
Who is insured under a juvenile life policy?
A minor
The death protection component of a universal whole life is expressed as what type of coverage?
Annually renewable term
You borrow 10k on a 5 year note from your bank. The note is due in installments. What type of policy is best suited for this situation?
Decreasing term
What are the death benefit options in a universal life policy?
Option A - level death benefit
Option B - increasing death benefit
When would a 20 pay whole life policy endow?
When the insured reaches age 100
What is the purpose of establishing the target premium for a universal whole life?
To prevent the policy from lapsing
When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?
Evidence of insurability
Under option B in the universal life, what happens to the death benefit?
The benefit increases each year by the amount the cash value increases
Between adjustable life and universal life, which one provides more flexibility?
Universal
What type of policy is typically issued without proof of insurability from the insured?
Group policy
Increasing term policy limits do what each year
Increase. Sometimes called return of premium policy
Do you need a physical to renew term insurance?
Not up until a certain age
Can you convert term insurance to whole life?
Yes but not the reverse. Conversion is based on the insureds age
On term insurance the re entry is contingent upon
A physical exam
In an annual renewable term the premium will increase what happens to the face amount
It stays the same
The face amount on a mortgage protection life insurance policy decreases at
The same rate the mortgage balance declines
What decreases in a decreasing term
The face amount not the premium
Whole life benefits are bundled (packaged), universal life benefits are
Transparent (stand alone)
Whole life and limited pay life both reach maturity at
Age 100
Traditional whole life policy premiums are due until
Until age 100 or the insured dies
Straight or traditional whole life has what premium and provides coverage until
Level premium and provides coverage until insureds death or reaches age 100
When policyowner lists a group of beneficiaries
Class designation
Can policy proceeds be paid directly to a minor?
No because they cannot sign a release
To change an irrevocable beneficiary what do you need
Beneficiaries consent
Does a revocable benny have any vested rights?
No but an irrevocable does
What happens if the primary beneficiary dies before the insured
Contingent benny receives $
Under the common disaster provision
Its assumed the insured died last
If the policy payments are paid in a lump sum does the spendthrift clause apply?
No
Annual interest on a LI loan is added to what as it accrues
The amt of the loan
What happens if an outstanding policy loan plus interest exceeds the cash value of the policy
Policy will lapse
When can you take a loan from a whole life policy?
As soon as it accumulates cash value
Automatic premium rider can be added to a whole life policy but not
to term or credit disability
When are partial surrenders usually allowed in
annuities, universal life and variable life
Does waiver of premium pay a cash value to the insured?
No
Waiver of premium
Rider that pays the premium on behalf of the disabled after a short waiting period until the insured recovers or dies
Payor Benefit
If parent paying premium on minors policy dies the premium is waived - not the same as waiver of premium
Accelerated Benefits rider
pays proceeds prior to death in the case of terminal illness
Change of insured
Employer wants to change key person from one key person to another
Annuity
Contract that pays specified indemnity to its owner over a period of time
