Vocab Flashcards
Premium receipt
issued when premiums are collected with application
Conditional receipt
Coverage effective on date of app or date of medical exam whichever occurs LAST as long is policy is issued as applied for
C.C.o. A.L.
- Agreement 2. Consideration 3. Competent Parties 4. Legal Purpose
Consideration
Insurance gives promise to pay and consumer gives application AND premium
ALEATORY
Sounds like A Lottery….means an UNEQUAL exchange. Think we buy a $1 ticket, and win a million
Standard Premium
Average health pays a standard payment
Preferred Premium
Someone that is in better health
Substandard Premium
Someone with a health condition would pay higher premium
PERSONAL
Means private between insured and agent/agency
ADHESION
Take it or leave it.
UNILATERAL
One sided promise
CONDITIONAL
Conditions must be met
Statement of good health
Person says yes, I am as healthy as I am today as when I filled out the application
INSURED
Person who death triggers the claim
REPLACMENT
Think BIG FROWNY FACE…Someone has a policy and we move to new company. In the real world there are good reasons to replace, however MAKE SURE it’s in the best interest of customer and document this and SAVE the documents. AND NEVER cancel old policy before new policy is issued.
UNDERWRITING
Risk Selection and Classification process. They decide if person is insurable and what premium to charge.
ADVERSE SELECTION
Insurance protect themselves by refusing or restricting coverage for bad risks or by charging a higher rate.
Insurable Interest
Policy own life - family member (spouce/kids) - business partner, key employee or someone who has a financial obligation to policyowner.
Valid insurable interest in life insurance
MUST exist at time of application
Application
Written request to an insurance company to issue a policy.
Consumer report (Think credit report)
Credit, character, employment record, hobbies, habbits
Consumer reports must be advised in writing is___ days
Within 3 days of request
Investigative consumer report
More in-depth investigation through associates, friends, neighbors.
MIB
Medical Information Bureau (exists to uncover any misrepresentations and prevent concealment. Adverse medical information cannot be the only reason for denial
Paramedical report
Completed by a paramedic or a registered nurse.
Attending physician statement
Completed by the applicant’s medical Doctor
Medical exams for insurance are paid by
The insurance company
HIV Testing
The insurer must disclose they are testing for this and may obtain written permission from applicant.
HIPPA
Federal Law, Protected Health Information (PHI)
STOLI Stranger Originated Life Insurance
Can’t buy a policy on random person
Policy Delivery
Personal delivery is best, mail is ok. Receipt is advisable, once delivered free look period begins.
Explaining provisions, riders, exclusions
Agent’s responsibility at drop off
By law, when we take an application, we MUST provide a buyer’s guide
Generic Info about Insurance policies, provided at time of application. Talks about similar policies and cost comps.
Policy Summary
Specific info about policy includes agent’s name, address, insurer’s full name, general name of policy, premium, rider, living benefits and surrender value
Illustrations for life Insurance
Marketing piece. Distinguishes guaranteed and projected amounts, clearly state not part of contract, Id’s those values not guaranteed. An agent cannot alter these in any way.
US Patriot act -
Federal law, anti-money laundering and terrorism. Requires SAR’s, continual training and appointed insurance employee to oversee.
SAR Suspicious Activity Report
Transactions of $5,000 or more red flags, fake Id’s etc
Statements provided by applicant for insurance is considered to be ______________
Representations
Insurance is a means of ___________risk
Transferring risk
Four types of Life Insurace
Term Life - Whole Life - Universal Life - Variable
Term life
Basics: Temporary. Lest expensive. No cash value. No loans. Matures at death.
Types: level - increasing - decreasing
Features: renewable - convertible
Uses: Max protection - Lowest cost - Increasing term for riders - decreasing for debtors.
Types of Term Life policies
increasing term (death benefit rises)
Return of premium policy
———–
level term (same rate every month death benefit remains the same)
Most used with life situations like parent with young kids
————–
decreasing term (same cost monthly but the death benefit decreases) used for people that want to make sure their mortgage gets covered. As the amount they owe goes down, they don’t need as much money to cover the mortgage.
Convertible
Right to convert at expiration - evidence of insurable is not required - Premium may be higher - Priced at insured attained (current) age.
Renewable
Right to renew at expiration - evidence of insuribility is not required - Priced at the insured’s attained age (current age)
Renewable
Right to renew at expiration - evidence of insurability is not required - Priced at the insured’s attained age (current age)
Traditional Whole Life Insurance
Also called cash value insurance, also called permanent protection - Living Benefits - Cash value equals face amount at insure’s age of 100.
Living Benefits
The owner can access what’s in cash value. they can loan the money to themselves.
Single Premium
Limited Pay
Straight Life
Some can pay one lump sum to pay for entire policy in one time.
Limited pay: Pay set number of years or to a specific age. Let’s say they pay through retirement age.
Straight life, same monthly payment till age 100.
Adjustable Life
The policy owner may adjust the premium payment period, the face amount, and the coverage period.
Suitable as insureds whose incomes are unpredictable.
Universal Life Insurance
Adjustable life insurance. When you see the “U” in Universal remind yourself that person can adjust the premium up or down. Guaranteed interest rate. This is the only one that a person can take a withdrawal instead of a loan. Also, you can skip a payment a long as the cash value exceeds the premium. They will choose either a level death benefit or increasing. See next slide.
Universal Life Option A. Level Death Benefit
Option B. Increasing Death Benefit
Death benefit remains the same.
Death benefit - recipient receives not only the face value but also whatever is in the cash value.
Variable life Insurance
When you see a V in variable, remind yourself two lines in a “V” mean you need two licenses. A life license AND securities license. Variable license is governed by both State AND Federal Government. Remember two lines in “V”. Who would want Variable Life insurance? Someone who wants to decide how their money will be invested (i.e. stocks/bonds, stocks, but just technology company…percentage amounts, etc. Cash value is not guaranteed. This is not put into the general account. This is put into a separate account. Variable life insurance, the POLICY OWNER bears the investment risk.
What is Variable Universal Life?
Dually regulated state and federal, regulated by SEC and FINRA. Agents must be registerd with FINRA, Have security license. . Remember “V” and “U”.
Interest Sensitive whole Life
also called Current Assumption,
Indexed Life Insurance
Follows performance on the S&P 500, guaranteed minimum rate, and face amount increases annually to adjust for inflation.
Joint Life
vs.
Survivorship life or Survivor Life or Joint SURVIVOR
Insured 2 or more, premium based on joint age, but death benefit paid upon last person’s death. Policy for people who want to leave money to their kids, or cats… or maybe a family of siblings want to leave a scholarship behind.
