Q 73-96

Question 1

Lapse

Answer 1

Prem not paid, grace period not in force. No DB is paid if insured dies

Question 2

Grace Period

Answer 2

Inc. in all life policies. Period time after prem is due that policy remains in force. 31 days ordinary life, 61 UL

Question 3

Backdating

Answer 3

Policy may be issued up to 3 months before app to save an age change, and get lower prem. Prem start at issue date.

Question 4

Owners Rights

Answer 4

Change the beneficiary, Make loans / surrenders, Assign - give away values or ownership, Change prem or dividend pmt

Question 5

Assignments

Answer 5

Ways policy holder can give away values: 1.Absolute - gives away forever to “assignee” (college,charity), 2.Collateral - temp loan

Question 6

Misstatement of Age Clause

Answer 6

Co. will adjust DB if insured gave wrong age or gender at issue| 20/1000 iss @ 15/1000 = DB is 15/20 * orig DB

Question 7

Inter Vivos Trust

Answer 7

Trust created and funded during a persongs lifetime. DB is paid to trust, which will administer funds for small fee.

Question 8

HIV / AIDS Test

Answer 8

Ins. Co. now need permission to do blood tests for HIV. No questions about orientation. Secrecy ensured

Question 9

Spend Thrift Clause

Answer 9

Pol. Holder restricts the amount of money that the beneficiary can receive.

Question 10

False Statements on App

Answer 10

Any false statement on app or claim form is criminal action and can result in jail

Question 11

Insurable Interest

Answer 11

You must benefit from continued life of insured - “love and affection” or economic benefit. Can’t buy for a friend.

Question 12

Federal Fair credit reporting act

Answer 12

Applicants must give OK for Ins co. to check MIB. Applicant can correct any errors on report received by inspec co, agent/ins. Co. cannot disclose

Question 13

Medical Information Bureau (MIB)

Answer 13

Non-profit computer center that stores medical information by code. Issue decision of co. not reported. Not public info

Question 14

Insurability Factors

Answer 14

Factors in underwriting are: Age, Occupation, Physical condition, Medical history, Life style, Hobbies

Question 15

Preferred / Standard / Substandard

Answer 15

Classification of risk assigned by ins co. after underwriting: Preferred - discount, Standard - average, Substandard - extra charge

Question 16

Exclusions (to life ins. Coverage)

Answer 16

Few times ins will not pay proceeds: 1.War, 2.High Risk flying, 3.High risk hobbies

Question 17

Attending Physical Statement (APS)

Answer 17

underwriter request to physician, signed by applicant, releasing personal medical info

Question 18

Retention Limits

Answer 18

Max DB a co. is willing to insure any single life. Beyond amount it will “reinsure” (share with other co’s).

Question 19

Annuity

Answer 19

contract designed to grow tax deferred and distribute $ over a lifetime. Can grow fixed or variable

Question 20

When are Annuity payments received?

Answer 20

This is “pay-out” period. Immediate pays one month to 1 year from purchase. Deferred start later date (after 1 year)

Question 21

How can Annuities be purchaced?

Answer 21

Single Prem- for payout within 1 month to 1 year, Periodic Flexible- make dep intervals (as many as want) benefit paid later

Question 22

Contingent Deferred Sales Charge

Answer 22

“Back End” charge taken form annuity surrendered before maturity date. Gradually decreases to 0 Wived for D,D,& LTC

Question 23

Non-Forfeiture Values

Answer 23

Ways insured can access cash value of policy. 1. Cash-surrender/take loan, 2.Buy reduced “paid up” policy, 3.Extended Term - Auto option

Question 24

Settlement Options

Answer 24

Optional ways(other than lump sum) to pay proceeds to beneficiary at death, or policy owner if surrendered

Question 25

Facultative Reinsurance

Answer 25

Case by case reviews by the reinsuring co.