To study

Question 1

concealment

Answer 1

failure by applicant to disclose a known fact

Question 2

express authority

Answer 2

explicit authority as written in contract

Question 3

implied authority

Answer 3

authority that is assumed to be the producers, but not specified

Question 4

apparent authority

Answer 4

insurer gives customer reasonable belief that an agent has the power to bind the principal

Question 5

aleatory

Answer 5

potential for unequal exchange of value for both parties

Question 6

accidental death benefit rider

Answer 6

if insured dies due to an accident, amount paid to beneficiary is double or triple policy amount

Question 7

accelerated benefits rider

Answer 7

allows insured access to death benefits in the case of terminal illness, diagnosed to live 1-2 years. whatever is left-what was taken out goes to beneficiary

Question 8

accumulated interest option

Answer 8

leaves dividends to insurer in order to accumulate interest. this interest is taxed and must be paid by the policyowner

Question 9

automatic premium loan provision (rider)

Answer 9

insurer can deduct overdue payments from cashvalue if after grace period; they can automatically take out a loan to receive payment if payment is never paid

Question 10

payor provision

Answer 10

in the event of a death/disability of adult premium payor, premiums on a juvenile policy will be waved until child reaches age or policy reaches maturation date

Question 11

universal life

Answer 11

• flexible premium and adjustable death benefits;
• investment gains go to cash value
• uses cash gains to give policyowner flexible premiums and death benefits

Question 12

variable life

Answer 12

• requires FINRA and NASD
• KNOWN AS INTEREST SENSITIVE
• fixed level premiums
• cash value and death benefit fluctuate according to its investment portfolio
• policy owner assumes risk of investment and rate of return is NOT guaranteed

Question 13

variable universal life

Answer 13

• policy owner controls investment of cash value
• selects timing and payment of premium
• hence, policy owner can control how much and when premium is due, investment accounts used for funding, and where the investment returns go

Question 14

family income life

Answer 14

• combines WHOLE LIFE and DECREASING TERM
• once insured dies, income payments made to beneficiaries until the term is complete (i.e. 15, 20 years…) from the DATE OF THE POLICY ISSUE, not the date of death
• if death occurs after this period, only face value (whole life) is provided because decreasing term expired

Question 15

family maintenance life

Answer 15

• combines WHOLE LIFE and LEVEL TERM
• provides income for set amount of years starting at the death of insured
• if death occurs after this period, beneficiary will only receive face value

Question 16

adjustable life

Answer 16

• policy owner can adjust from whole to term, or term to whole
• policy owner determines how much face amount and how much premium payment, and insurer goes by this choice