Types of Insurance (page 48-53)

Question 1

Premium rates must be filed where?

Answer 1

to the commissioner of insurance- all schedules- prior to use

Question 2

Premium rates for traditional closed-end transactions are expressed…

Answer 2

Per $100 of initial gross indebtedness, per year of coverage

Question 3

Premium rates for open-end transactions are expressed…

Answer 3

Per $1,000 of insurance in force, and then added to monthly loan payment

Question 4

Term life insurance is…

Answer 4

temporary death protection for a specified period of time

Question 5

Types of term insurance

Answer 5

level, decreasing, and increasing

Question 6

Credit life insurance typically deals with which term?

Answer 6

decreasing

Question 7

Truncated life

Answer 7

aka partial life- provides protection for less than the term of indebtedness (usually used on loans over 60 months)

Question 8

Suicide provision

Answer 8

The death benefit is limited to a return of premium in the event of suicide within the first 2 years

Question 9

Credit Accident and health insurance

Answer 9

Disability income insurance. Policies require that the insured be actively at work to be eligible to purchase.

Question 10

Credit A&H defines sickness as a(n) ______. Injuries are defined as _____

Answer 10

Absence of health, accidents

Question 11

When can benefits be paid as a new payoff lump sum as opposed to installment payments?

Answer 11

If the insured becomes permanently and totally disabled

Question 12

Elimination Period

Answer 12

“A time deductable”- Waiting period for every accident or sickness claim during which the insured must be totally disabled

Question 13

Probationary period

Answer 13

One-time waiting period for sickness claims, only measured from policy’s effective date

Question 14

Benefit period

Answer 14

Period of time which benefits will be paid following the elimination period

Question 15

Disability joint eligibility

Answer 15

only the primary borrower is eligible for coverage in most cases.

Question 16

Disability on single payment loans when offered…

Answer 16

Coverage requires total and permanent disability

Question 17

A lump sum benefit

Answer 17

The outstanding balance of a loan on the date of disability, usually with a 90 day elimination period

Question 18

Critical period disability coverage

Answer 18

Coverage offered for the full term of the loan, but with the benefit limited to a specified number of monthly payments, or the remaining payments if less.

Question 19

Truncated disability coverage

Answer 19

Coverage offered during a portion of the term of the loan. Benefits are only paid if it occurs during term of coverage.

Question 20

Disability Exclusions

Answer 20

Pre-existing conditions, self-inflicted injury, pregnancy, aviation on scheduled flights, war and acts of war.