Podcast
Questions and Answers
What would be an expense factor in an insurance program?
What would be an expense factor in an insurance program?
Mortality costs
Which settlement option should Pam choose to let the death benefit accumulate and receive only the monthly investment proceeds?
Which settlement option should Pam choose to let the death benefit accumulate and receive only the monthly investment proceeds?
Interest option
Which component is affected by an insured's age and gender when calculating life insurance premium rates?
Which component is affected by an insured's age and gender when calculating life insurance premium rates?
Mortality
Which clause protects proceeds from a life insurance policy from the beneficiary's creditors?
Which clause protects proceeds from a life insurance policy from the beneficiary's creditors?
What is the term for the number of deaths in a year compared to the number of people in a select group?
What is the term for the number of deaths in a year compared to the number of people in a select group?
Under which component does an agent's commission fall when calculating life insurance premium rates?
Under which component does an agent's commission fall when calculating life insurance premium rates?
Which of the following is NOT a life insurance settlement option?
Which of the following is NOT a life insurance settlement option?
What is the price of insurance for each exposure unit called?
What is the price of insurance for each exposure unit called?
Which of the following is NOT an insurer policy expense?
Which of the following is NOT an insurer policy expense?
When would creditors be allowed rights to life insurance policy proceeds?
When would creditors be allowed rights to life insurance policy proceeds?
In which settlement option does a beneficiary receive only the death benefit earnings?
In which settlement option does a beneficiary receive only the death benefit earnings?
What does the frequency of an insurance policy's premium payments affect?
What does the frequency of an insurance policy's premium payments affect?
What does a spendthrift clause in a life insurance policy do?
What does a spendthrift clause in a life insurance policy do?
How can premiums be best described?
How can premiums be best described?
How are death benefits received by a beneficiary usually treated for tax purposes?
How are death benefits received by a beneficiary usually treated for tax purposes?
Flashcards
Mortality Rate
Mortality Rate
The number of deaths in a year divided by the total population exposed to a specific risk.
Premium
Premium
The amount paid by an insured for each unit of coverage, reflecting the risk profile and coverage options.
Spendthrift Clause
Spendthrift Clause
A clause in a life insurance policy that protects the beneficiary's portion of the death benefit from creditors.
Interest-Only Option
Interest-Only Option
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Mortality
Mortality
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Interest Option
Interest Option
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Insurance Rate
Insurance Rate
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Premium Payment Frequency
Premium Payment Frequency
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Lump Sum Option
Lump Sum Option
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Estate as Beneficiary
Estate as Beneficiary
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Tax-Free Death Benefit
Tax-Free Death Benefit
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Premium Rate Calculation
Premium Rate Calculation
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Spendthrift Clause Function
Spendthrift Clause Function
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Income Option
Income Option
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Spendthrift Trust Clause
Spendthrift Trust Clause
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Study Notes
Insurance Expense Factors
- Mortality costs are a significant expense factor in insurance programs, influencing overall premium rates.
Beneficiary Settlement Options
- Choosing the interest option allows a primary beneficiary, like Pam, to let the death benefit accumulate while only receiving monthly investment proceeds.
- The interest-only option permits the beneficiary to receive solely the earnings generated from the death benefit.
Premium Rate Calculations
- Mortality, influenced by an insured's age and gender, is a critical component in determining life insurance premium rates.
- Agent commissions contribute to the insurer's expenses, which cumulatively affect premium calculations.
Protection of Proceeds
- The spendthrift trust clause safeguards life insurance policy proceeds from being claimed by the beneficiary's creditors, ensuring financial protection.
Mortality Rate Understanding
- The mortality rate is defined as the number of deaths in a year relative to the total population exposed to a given risk.
Life Insurance Settlement Options Overview
- Common life insurance settlement options include various payout structures, but the "extended term option" is not considered a traditional option.
Insurance Pricing and Costs
- The rate represents the price of insurance calculated per exposure unit, differing based on underwriting factors such as risk.
- The frequency of premium payments directly impacts the overall cost of the insurance policy, with less frequent payments typically resulting in higher costs.
Beneficiary Rights and Implications
- If a life insurance policy names the insured's estate as the beneficiary, creditors can access the policy proceeds.
- Death benefits received by beneficiaries are generally exempt from federal income tax, providing a financial advantage following a policyholder’s passing.
Spendthrift Clause Functionality
- The spendthrift clause restricts a beneficiary's ability to spend the benefits irresponsibly, ensuring that funds are preserved for their intended purpose.
Definition of Premiums
- Premiums are defined as the amount an insured pays for each unit of coverage, reflecting the risk profile and coverage options selected.
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Description
Test your knowledge on key insurance concepts with these flashcards from Chapter 5. Each card covers important definitions and terms related to expense factors and beneficiary options in insurance programs. Perfect for studying or reviewing essential insurance principles.
