Taxes, Retirement, and Other Insurance Concepts Flashcards
principle under which it is assumed that the funds paid into the policy first will be paid out firs
FIFO
principle applied to asset management in life insurance products, wnder which it is assumed that the funds paid into the policy last will be paid out first
LIFO
maturity date
Policy endowment
the right of a participant in a retirement plan to retain part or all of the benefits
vesting
legal term used to identify an individual or entity that is not an insured under the contract, but that has legally enforceable right under it
third party ownership
most third party contracts are written fro
business or minors
allow someone living with a life threatening condition to sell thier existing life insurance policy and use the proceeds when they are most needed, before their death
viactical settlements
in viactical settlements, the insured is known as
viators
in viactical settlements, a ____ is a person other than the viator that enters the contract
provider
in a viactical settlement, who represents the providers?
producers
in a viactical settlement, who represents the insureds?
brokers
refers to any financial transaction in which the owner of a life insurance policy sells a life insurance policy to a third party for some form of compensation, usually cash
life settlement
refers to any activity relating to the solicitation and sale of a life settlement contract to a third party who has no insurable interest in the insured
business of life settlement
refers to the owner of the life insurance policy who seeks to enter into a life settlement contract
owner
establishes the terms under which the life settlement provider will pay compensation to the policyowner, in return for the assignment, transfer, sale, or release of any portion of the death benefit, policy ownership, beneficial interest, or interest in a trust
life settlement contract
a person who, for compensation, solicits and negotiates a life settlement contract
life settlement broker
a person (other than the owner) who enters into a life settlement contract with the owner
life settlement provider
issued to the sponsoring organization, and covers the lives of more than one individual member of that group
group life insurance
Group life insurance is usually written as what type of insurance?
annually renewable term
The cost of coverage in group life insurance is based on what?
the ratio of men and women in the group
two features that distinguish group insurance from individual insurance are
no need for evidence of insurability, insureds under the plan do not receive a policy because they are not the owner
under group insurance, what do the participants recieve instead of a policy?
certificate of insurance
under group insurance, what does the sponsor of the group receive?
master policy/contract
characteristics needed for group insurance
purpose, size, turnover rate, financial strength
if an employee terminates membership in the insured group, the employee has the right to convert to an individual policy without proving insurability at a standard rate, based on the individuals attained age
Conversion privelege
conversionn privelege can be used to convert to every type except
term insurance
How long does a terminating employee have to take the conversio policy
31 days
if a master group contract is terminated, what is allowed?
Every individual who has been on th eplan fro more than 5 years can convert to individual permanent insurance of the same coverage
when an employer pays all of the premiums
noncontributory plan
under a noncontributory plan, an insurer will require ..
100% of eligible employees be included in a plan
When the premiums of group insurance are shared between the employer and employees
contributory plan
under a contributory plan, am dinsurer will require..
75% of eligible employees be included in the plan
approved by the IRS and gives both the employer and employee benefits such as deductable contributions and tax-deferred growth
qualified retirement plan
not subject to the requirements regarding participation, discrimination, and vesting found in qualified plans
nonqualified
allows individuals to make tax deductable contributions until the age of 70 1/2.
individual retirement account (IRA)
a form of an individual retirement account funded with after-tax contributions
Roth IRA
