Q 49-72 Flashcards
Family Term Benefit Rider
Family covered by one policy (Whole life on parent, term on spouse / children. One fee covers all children after age 15 days (natural/adopted)
Accidnetal Death Benefit
Extra cost rider requires Co. pay additional benefit if insured dies within 90 days of accident “double indemnity”
Guarenteed Insurability Benefit Rider
extra cost rider permits the policy owner to buy additional policies at specific ages w/o evidence of insurability 25 +3years till 40
Waiver of Premium Benefit
extra cost rider requires Co. take over and pay premiums if totally disabled for 6 months. Refund for 6 months made.
Payor Benefit Rider
extra cost rider that pays for juvinile insured if owner dies/disabled
Mutual Company
Co. that is owned and controlled by policy holders who receive non-taxable dividends from participating policies
Stock Company
Co. that is owned by shareholders or stock holders
Factors that make up a premium
Factors determine cost: 1. Mortality (minus) 2. Interest (plus) 3. Expenses - including commisitons/profit
Dividends
Return of a portion of the surplus of a “participating policy” - return of prem., not taxable - not guarenteed. Based on current estimates only.
Participating Policies and Non-Participating Policies
Participating Policies = return portion of Co. surplus - Non-Participating policies = do not return any surplus
Dividend Options
CRAPY - Cash, Reduce next years premium, Accumulate at taxable interest (gives most $ if cash in), Paid up additions (most DB), Yearly renewable term
Legal Reserves
Money required by state to hold to pay expected future death claims.
Beneficiary
Person named to receive proceeds of policy at death. - Divorce spouse is considered to have “died” and will not be paid
Per Capita / Per Stirpes
Per Capita - Leaves proceeds equally to all surviving beneficiaries. - Leaves share of beneficiary who has died to children of decnedant
Policy Sales Illustrations
Sales proposals/illustrations must show guarenteed values and clearly identified dividends as estimates only. Must be left with client and signed by agent.
C.O.L.A. Cost of living adj / R.O.P. Return of prem
COLA - rider increases DB automatically, as CPI (Consumer Price Index) increases // ROP - rider that increases DB with term equal to cumulative prem
Application
Written request to Co. with personal facts, medical history, agents statement, formalized by insured signature. Photo copy included in policy itself
Warranty
100% true statement. This degree of accuracy is not required on an insurance application. Any error will create a breach of contract and void policy
Representations
Answers on an application are true “to the best of the insured’s knowledge”. Non-material facts could be forgotten or left our and still be ok
Misrepresentations
False representations (answers) on an ins app. If intentional and with intent to gain a financial advantage, then can be fraud. May be contested for 2 years
Incontestable Clause
After 2 years from issue date any misrepresentation on an app is “incontestable”
Suicide Clause
Ins. Co will refund only the prem paid (w/o interest), if insured commits suicide with in 2 years of policy
Conditional Reciept
Recipt given by the ins co during the underwritting process. Ins wil be in force only if co finds the insured an acceptable risk. Reciept does not bind co.
“Offer”
When prospective client sends a complete and signed application and the first months premium to the company, they are making an offer.
