Unit 1 Flashcards
1
Q
insuring of risks that are more prone to losses than the average risk
A
Adverse selection
2
Q
A legal representative of an insurance company; the classification of producer usually includes agents and brokers; agens are the agents of the insurer
A
Agent/Producer
3
Q
The insured’s age at the time the policy is issued or renewed
A
Attained Age
4
Q
a person applying for insurance
A
Applicant
5
Q
A person who receives the benefits of an insurance policy
A
Beneficiary
6
Q
a policy’s savings element or living benefit
A
Cash value
7
Q
The amount paid upon the death of the insured in a life insurance policy
A
Death benefit
8
Q
withheld or postponed until a specified time or event in the future
A
Deferred
9
Q
to have the cash value of a whole life policy reach the contractual face amount
A
Endow
10
Q
the amount of benefit stated in the life insurance polity
A
Face amount
11
Q
person covered by the insurance policy; may or may not be the policyowner
A
Insured
12
Q
the company that issues an insurance policy
A
Insurer
13
Q
policy termination due to nonpayment of premium
A
Lapse
14
Q
the premium that does not change throughout the life of a policy
A
Level Premium
15
Q
benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
A
Nonforfeiture values
16
Q
the person entitled to exercise the rights and privileges in the policy
A
Policyowner
17
Q
in life policies, the time when the face value is paid out
A
Policy maturity
18
Q
the money paid to the insurance company for the insurance policy
A
Premium
19
Q
financial instruments that may trade for value )for example, stocks, bonds, options)
A
Securities
20
Q
There are many types of life insurance products available for consumers. Although all life insurance products offer death protection, each type also includes its own unique features and benefits and is designed to serve different insureds’ needs
A
There are many types of life insurance products available for consumers. Although all life insurance products offer death protection
21
Q
Regarding the length of coverage, all life insurance policies fall into 2 catagories:
A
Temporary and permanent protection
22
Q
Which insurance policy provides temporary protection because it only provides coverage for a specific period of time it is also known as pure life insurance.
A
Term insurance
23
Q
Term insurance provides what is known as
A
Pure death protection
24
Q
Term insurance provides the greatest amount of coverage for the lowest premium
A
Term insurance provides the greatest amount of coverage for the lowest premium
25
Term insurance has no cash value
Term insurance has no cash value
26
Term insurance refers to the death benefit, which does NOT change
Level
27
The purest form of term insurance. The death benefit remains level (in that sense, it's a level term policy), and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as the probability of death increases.
Annually Renewable Term (ART)
28
Provides a level death benefit and a level premium during the policy term.
Level Premium
29
A level premium and a death benefit that decreases each year over the duration of the policy term.
Decreasing Term
30
Level premiums and a death benefit that increases each year over the duration of the policy term.
Increasing Term
31
An increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid. The return of premium is paid if the death occurs within a specified period of time or if the insured outlives the policy term.
Return of Premium (ROP)
32
provision allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability. The premium for the new term policy will be based on the insured's current age.
Renewable
33
Provides the policy owner with the right to convert the policy to a permanent insurance policy without evidence of insurability. The premium will be based on the insured's attained age at the time of conversion.
Convertible
34
Life insurance is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid. The most common type of permanent insurance is whole life.
Permanent
35
provides lifetime protection and includes a savings element (or cash value). Whole life policies endow at the insured's age 100, which means the cash value created by the accumulation of premium is scheduled to equal the face amount of the policy at age 100.
Whole life insurance
36
provides lifetime (permanent) protection and accumulates cash value.
Whole Life Insurance
37
basic whole life policy. The policy owner pays the premium from the time the policy is issued until the insured's death or age 100 whichever occurs first. O the common whole life policies, straight life will have the lowest annual premium.
Ordinary (Straight) Life
38
Designed so that the premiums for coverage will be completely paid-up well before age 100.
Limited Pay life
39
Insurance is that the cash value is dependent upon the performance of the equity index, such as S&P 500 although there is a guaranteed minimum interest rate.
Indexed Whole Life
40
Whole life policy that charges a lower premium (similar to term rates) in the first few policy years, usually the first 3 to 5 years, and then a higher-level premium for the remainder of the insured's life.
Modified Lfe
41
premiums start out relatively low and then level off at a point in the future.
Graded-premium whole life
42
Premium rate that may vary from year to year.
Indeterminate Premium Whole Life
43
a whole life policy that provides a guaranteed death benefit to age 100. The insurer sets the initial premium based on current assumptions about risk, interest and expense.
Interest-sensitive whole life (Current Assumption)
44
Whole life policy that has all the same features as regular whole life policies with a slight variation in the maturity date. The provide a permanent, level death protection if the insured should die prematurely, and the accumulate cash values. Premiums can be paid up until the endowment date, for a limited period of time, or in a lump sum single payment.
Endowment Policy
45
Policy can assume the form of either term insurance or permanent insurance.
Adjustable Life
46
also known by the generic name of flexible premium adjustable life. If an insured skips a premium payment on a universal life policy, the missing premium may be deducted from the policy's cash value. The policy will not lapse.
Universal Life
47
The amount needed to keep the policy in force for the current year. Paying the minimum premium will make the policy perform as a annually renewable term product.
Universal Life Minimum premium
48
A recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
Universal Life Target Premium
49
If an insured skips a premium payment on a universal life policy, the missing premium may be deducted from the policy's cash value. The policy will NOT lapse.
If an insured skips a premium payment on a universal life policy, the missing premium may be deducted from the policy's cash value. The policy will NOT lapse.
50
A single policy that is designed to insure two or more lives. Joint life policies can be in the form of term insurance or permanent insurance.
Joint Life
51
Premium rates on a joint life policy are determined by averaging the ages of both insureds.
Premium rates on a joint life policy are determined by averaging the ages of both insureds.
52
Second to die or last survivor policy is much the same as joint life in that it insures two or more lives.
Survivorship Life
53
Allow for an additional amount of temporary insurance to be prpovided on the insured, without the need to issue another policy. They are usually attached to a whole life policy to provide greater protection at a reduced cost.
Term Rider
54
If a policy offers pure death protection, what does this mean? What does this reveal about the cash value of the policy?
It means that there is no cash value.
55
With annually renewable term insurance, what happens to the premium as one's age increases?
The premium increases each year with the age of the insured.
56
Many policies are both renewable and convertible. What are the similarities between these two provisions?
With both a renewable policy and a convertible policy, the premium for the renewed or converted policy will be based on the insured's current age at the time of renewal or conversion. Also, evidence of insurability is not required for either provision.
57
How does continuous premium straight life differ from 20-year limited pay life?
The premiums for straight life will be spread over the insured's lifetime, thus enabling the insurance company to charge a lower annual premium. When the premium-paying period is condensed to a 20-year duration, a higher annual premium is required.
58
Does the death benefit of an Adjustable Life policy automatically increase with inflation?
Adjustments to the death benefit can be made by the policyowner, and not automatically, and would usually require evidence of insurability.
59
As time progresses, what happens to a premium in a Graded Premium Whole Life Policy?
The premium gradually increases each year for the first few years of the policy (5 to 10) and then remains level thereafter.
60
How does the premium for Joint Life compare to the premium on two policies covering the same two individuals for the same death benefit?
The premium for joint life would be less than for the same type and amount of coverage on the same individuals; it is based on a joint average age that is between the ages of the insureds.
61
Who is the insured under a Juvenile Life policy?
Juvenile life insurance is, as the name implies, any life insurance written on the life of a minor.
62
What are the death benefit options in Universal Life policies?
Option A is the level death benefit option, and Option B is the increasing death benefit option.
63
Which authorities regulate Variable Life policies?
Variable life insurance products are dually regulated by the State and Federal Governement: The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the State Department of Insurance
64
Who bears the investment risk on a Whole Life Policy?
The Insurer is responsible. The insurance company
65
Who bears the investment risk on a variable product?
The insured controls the investment choices
66
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Lift - Option A
67
Which of the following best describes annually renewable term insurance?
Level Term Insurance
68
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal.
69
Which policy component decreases in decreasing term insurance?
Face amount
70
To sell variable life insurance policies, and agent must receive all of the following:
A securities license, Life insurance license and FINRA Registration
71
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a
Interest-sensitive Whole Life
72
What is the purpose of establishing the target premium for a universal life policy?
To Keep the policy in force
73
What are the characteristics of universal life insurance?
Flexible death benefit, Cash account, and Unbundled premium
74
What determines the cash value of a variable life policy?
The performance of the policy portfolio
75
A policy will pay the death benefit if the insured dies during the 20-year premium paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level Term
76
The premium of a survivorship life policy compared with that of a joint life policy would be
As high as that of a joint life policy
77
our client wants both protection and savings from the insurance and is willing to pay premiums until retirement at age 65. Wha would be the right policy for this client?
Limited pay whole life
78
When would a 20-pay whole life policy endow?
When the insured reaches age 100
79
What does not cause the Death Benefit to increase?
Payor Benefit Rider
80
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Variable life
81
The following are true about variable products.
Policy owners bear the investment risk.
The minimum death benefit is guaranteed.
The cash value is not guaranteed.
82
The least expensive first-year premium is found in which of the following policies?
Annually Renewable Term
83
Variable Whole Life insurance is based on what type of premium?
Level fixed
84
Which is true regarding an indeterminate premium whole life policy
The premium can be raised up to a guaranteed maximum rate.
85
Most term policies contain a convertibility option
True
86
Upon conversion, the premium for the permanent policy will be based upon attained age.
True
87
Evidence of insurability is not required in converting under a term life
True
88
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
89
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
90
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
