Life Insurance Premiums, Proceeds, and Beneficiaries Flashcards
Accelerated benefit (option ) rider
Allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness and is certified by physician, that will die in 1-2 years
Beneficiary
Is the person or entity designated in a life insurance policy to receive the death proceeds? 
Cash value
The cash value is the entity or savings element of whole life insurance policies 
Class designation
Is a beneficiary group designation (for example all my children) opposed to specifying one or more beneficiaries by name
Common disaster, provision
Ensures a policy owner if both the insured and the primary beneficiary die with any short period of time, the death benefits will be paid to the contingent beneficiary
Contingent (second) beneficiary
Second in line to receive death benefits
Earned premium
Is the amount of premium paid by the policy owner for policy coverage or insurance protection received up to this point
Expense factor
Also known as the loading charge is a measure of what it cost an insurance company to operate
Excess interest
The cash value will increase faster than the guaranteed rate, if the insurer earns a greater return than the guaranteed rate
Fixed amount installment option
Pays a fixed death benefit in specified installment amount, until the principal and interest are exhausted
Fixed/level premium
averaging what would be the total single premium for a policy over periodic payments, more periodic payments, equal higher total premium
Fixed period or period certain option
Pays the death benefit proceeds in equal installments of a set period of years
Graded premium
Lower premium in the early years of contract with premiums increasing annually for an introductory. After that. The premium to an amount, higher than what the initial level premium would have been, then remains fixed or constant for the life of the policy
Gross (annual) premium
The net premium for Insurance , plus commissions, operating and miscellaneous expenses and dividends
Interest factor
Calculation of determining the amount of interest in insurance company can expect to earn from investing insurance premiums
Interest only option
Where the insurance company holds the death benefit for a period of time and pays only the interest earned to the name beneficiary a minimum rate of interest is guaranteed and the interest must be paid at least annually
Irrevocable beneficiary
A beneficiary that may not be changed by the policy owner without the written consent of the beneficiary
Joint and survivor option
Guarantees the benefits will be paid on a lifelong basis to two or more people. This option may include a period certain, and the amount payable is based on the ages of the beneficiaries.
Life income option
Provides the beneficiary with an income that they cannot outlive
Life settlement
Agreement in which a policyholder cells or transfers ownership in all or part of a life insurance policy to a third-party for compensation
Lump sum option
The death benefit is paid in a single payment minus any outstanding policy loan balance and overdue premiums. lump sum option is considered “default” option
Modified premium
An initial premium that is lower than it should be during an introductory period of time. After this time, the premium will increase to an amount, greater than what the industrial level premium would have been, and then remains level or constant for the life of the policy.
Mortality rate
The measure of the number of deaths in some population scaled to the size of the population per unit time
Morbidity rate
The incidence and extent of disability that may be expected from a given group of people
Net payment cost index
 if formula used to determine the actual cost of a policy for a policy owner it helps the consumer compare cost of death protection between policies that will be held for 10 or 20 years
Net (single) premium
Premium calculation used to calculate an ensures policy reserves, factoring in interest in mortality
Per capita
Evenly distributes benefits among all name, living beneficiaries, (example all living children)
Per stripes (by the bloodline)
Evenly distributes benefits among the insured according to the family line or root (children and grandchildren)
Premium mode
The premium mode is the frequency in which a policy owner elects to pay premiums
Primary beneficiary
The first beneficiary in line to receive benefit proceeds upon the death of the insured
Policy proceeds
The amount actually paid as a death, surrender or maturity benefit. Includes the face value plus any earned dividends, less any outstanding loans and interest. If surrender benefits, the amount includes any cash value minus surrender charges, and outstanding loan interest. If maturity and benefit include the cash value less any outstanding loan and interest.
Reserves
The money set aside (required by the states insurance laws) to pay future claims 
Revocable beneficiary
Is a beneficiary that the policy owner may change at any time without notifying or getting permission from the beneficiary
Settlement options
 are optional modes of settlement provided by most life insurance policies options include lump sum, cash interest only fixed. Fixed amount, and life income.
Single, premium funding
Policy funding option where the policy owner pays a single premium that provides protection for life as a paid up policy
Spendthrift clause
Prevents creditors from obtaining any portion of policy proceeds upon an insured death. Additionally, the clause can be selected by the policy owner to prevent a beneficiary from recklessly spending benefits by requiring the benefits to be paid and fixed amounts or installments over certain period of time.
Surrender cost index
Is a cost comparison calculation formula used to determine the average cost per thousand for a policy that is surrendered for its cash value. It aids in cost comparison if the policy owner plans to surrender the policy for its cash value in 10 or 20 years.
Tertiary beneficiary
Is the third beneficiary in line to receive death benefit proceeds
Underwriting department
Is the department within an insurance company, responsible for reviewing applications, approving, or declining applications, and assigning risk classifications
Unearned premium
Premium that has been paid by policy owner for insurance coverage that has not yet been provided
Uniform simultaneously death act
States that if the insured and the primary beneficiary die at approximately the same time in a common accident, with no clear evidence, as to who died first the law will assume that the primary died first, therefore the death benefit proceeds are paid to the contingent beneficiary
Vertical settlement
A vertical cell settlement involves someone with a terminal illness, selling their existing life insurance policy to a third-party for a percentage of the death benefit
Viatical (viatee)
Is the new third-party owner in a viatical settlement
Viator
The viator is the original policy owner in a viatical settlement
