Premiums and Proceedsq

Question 1

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 a physician as expected to die within 1-2 years

Answer 1

Accelerated Benefit (Option) Rider

Question 2

the person or entity designated in a life insurance policy to receive the death proceeds

Answer 2

Beneficiary

Question 3

equity or savings element of whole life insurance policies

Answer 3

Cash Value

Question 4

a beneficiary group designation (for example, all my children) opposed to specifying one or more beneficiaries by name

Answer 4

Class Designation

Question 5

provision of the Uniform Simultaneous Death Act, which ensures a policy owner if both the insured and the primary beneficiary die within a short period of time, the death benefits will be paid to the contingent beneficiary. It also states that the primary beneficiary must outlive the insured by a specified period of time in order to receive the proceeds

Answer 5

Common Disaster Provision

Question 6

beneficiary second in line to receive death benefit proceeds if the primary beneficiary dies before the insured

Answer 6

Contingent (secondary) Beneficiary

Question 7

the amount of premium paid by the policy owner for policy coverage or insurance protection received up to this point

Answer 7

Earned Premium

Question 8

also known as the loading charge, is a measure of what it costs an insurance company to operate

Answer 8

Expense Factor

Question 9

this provision in life insurance means that the cash value will increase faster than the guaranteed rate if the insurer earns a greater return than the guaranteed rate

Answer 9

Excess Interest

Question 10

pays a fixed death benefit in automatic installment amounts until the principal and interest are exhausted

Answer 10

Fixed Amount Installment Option

Question 11

concept of averaging what would be the total single premium for a policy over periodic payments. more periodic payments = higher total premium

Answer 11

Fixed/Level premium

Question 12

settlement option that pays the death benefit proceeds in equal installments over a set period of years. The dollar amount of each installment depends upon the total number of installments

Answer 12

Fixed Period or Period of Certain Option

Question 13

as a premium funding option characterized by a lower premium in the early years of the contract, with premiums increasing annually for an introductory period. After the introductory period, the premium jumps to an amount higher than what the initial level premium would have been. It then remains fixed or constant for the life of the policy

Answer 13

Graded Premium

Question 14

an insurer’s gross is the net premium for insurance plus commissions, operating and miscellaneous expenses, and dividends

Answer 14

Gross (Annual) Premium

Question 15

the calculation for determining the amount of interest an insurance company can expect to earn from investing insurance premiums

Answer 15

Interest Factor

Question 16

a death settlement option where the insurance company holds the death benefit for a period of time and pays only the interest earned to the named beneficiary. a minimum rate of interest is guaranteed, and the interest must be paid at least annually

Answer 16

Interest Only Option

Question 17

beneficiary which may not be changed by the policy owner without the written consent of the beneficiary

Answer 17

Irrevocable Beneficiary

Question 18

Settlement option that guarantees that 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

Answer 18

Joint and Survivor Option

Question 19

death benefit settlement option which provides the beneficiary with an income option that they cannot outline. Installment payments are guaranteed for as long as the recipient lives. The amount of each installment is based on the recipient’s life expectancy and the amount of pricipal

Answer 19

life income option

Question 20

an agreement in which policy owner sells or transfers ownership in all or part of a life insurance policy to a third party for compensation that is less than the expected death benefit of the policy

Answer 20

life settlement

Question 21

death benefit option where the death benefit is paid in a single payment, minus any outstanding policy loan balances and overdue premiums. Considered the automatic (or “default”) option for most life insurance contracts

Answer 21

Lump Sum Option

Question 22

a premium funding option characterized by an initial premium that is lower than it should be during an introductory period of time (usually the first three to five years). After this time, the premium will increase to an amount greater than what the initial premium would have been and then remains level or constant for the life of the policy

Answer 22

modified premium

Question 23

demonstrates the incidence and extent of disability that may be expected from a given group of people

Answer 23

Morbidity Rate

Question 24

measure of number of deaths (in general, or due to a specific cause) in some population, scaled to the size of that population, per unit time

Answer 24

Mortality Rate

Question 25

a formula used to determine the actual cost of a policy for a policy owner. It helps the consumer compare costs of death protection between policies that will be held for ten or twenty years

Answer 25

Net Payment Cost Index

Question 26

a premium calculation used to calculate an insurer’s policy reserves factoring in interest and mortality

Answer 26

Net (single) Premium

Question 27

evenly distributes benefits among all named living beneficiaries (i.e. all living children)

Answer 27

PER CAPITA (by the head)

Question 28

evenly distributes benefits among an insured’s according to the family line, branch, or root (i.e. children and grandchildren)

Answer 28

Per Stirpes

Question 29

the frequency in which a policy owner elects to pay premiums

Answer 29

Premium Mode

Question 30

first beneficiary in line to receive benefit proceeds upon the death of an insured

Answer 30

Primary Beneficiary

Question 31

the amount actually paid as a death, surrender, or maturity benefit. In case of a death benefit, it includes the face value plus any earned dividends less any outstanding loans and interest; If surrender benefit, the amount includes any cash value, minus surrender charges, and outstanding loans and interest. If maturity, the benefit amount includes the cash value less any outstanding loans and interest

Answer 31

Policy Proceeds

Question 32

the money set aside (required by the state’s insurance laws) to pay future claims

Answer 32

Reserves

Question 33

a beneficiary that a policy owner may change at any time without notifying or getting permission from the beneficiary

Answer 33

Revocable Beneficiary

Question 34

optional modes of settlement by most life insurance policies. Options include lump-sum cash, interest only, fixed-amount, and life income

Answer 34

settlement options

Question 35

a policy funding option where the policy owner pays a single premium that provides protection for life as a paid-up policy

Answer 35

Single Premium Funding

Question 36

Prevents creditors from obtaining any portion of policy proceeds upon an insured’s death. Additionally, the clause can be selected by the policy owner to prevent a beneficiary from recklessly spending benefits by requiring benefits to be paid in fixed amounts or installments over a certain period of time

Answer 36

spendthrift clause

Question 37

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 comparisons if the policy owner plans to surrender the policy for its cash value in ten or twenty years

Answer 37

surrender cost index

Question 38

the third beneficiary in line to receive death benefit proceeds. This beneficiary will only receive the death benefit if both the primary and contingent beneficiaries die before the insured

Answer 38

Tertiary Beneficiary

Question 39

department within an insurance company responsible for reviewing applications, approving and denying applications, and assigning risk classifications

Answer 39

underwriting department

Question 40

includes the premium that has been paid by a policy owner for insurance coverage that has not yet been provided

Answer 40

Unearned Premium

Question 41

states that if the insured and the primary beneficiaries die at approximately the same time, in a common accident, with no clear evidence as to who died first, the law will assume the primary died first. Therefore, the death benefit proceeds are paid to the contingent beneficiaries.

Answer 41

Uniform Simultaneous Death Act

Question 42

involves someone with a terminal illness selling their existing life insurance policy to a third party for a percentage of the death benefit

Answer 42

Viatical Settlement

Question 43

New third party owner in a viatical settlement

Answer 43

Viatical (Viatee)

Question 44

original policy owner in a viatical settlement

Answer 44

viator