Insurance Vocabulary Flashcards
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Questions and Answers

What can an individual do with a $200,000 convertible term life insurance policy?

Convert to a whole life policy for the same face amount without proof of insurability.

Which of the following would be an example of policy replacement?

  • A policy is converted to a permanent policy.
  • A policy has an increased death benefit.
  • A policy has a reduced premium.
  • A policy is reissued with a reduction in cash value. (correct)

    • What are cash value guarantees in a whole life policy called?

    Nonforfeiture values.

    Which settlement option should a policyowner select to guarantee income for both beneficiaries for life?

    <p>Joint and Survivor.</p> Signup and view all the answers

    Which act stated that the federal government would not regulate insurance as long as the states did an adequate job of regulating the industry?

    <p>McCarran-Ferguson Act.</p> Signup and view all the answers

    Which information needs to be included on an application for life insurance?

    <p>Medical history.</p> Signup and view all the answers

    An applicant for surplus lines authority must do all of the following EXCEPT?

    <p>Possess a certificate of authority in this state.</p> Signup and view all the answers

    Which of the following policies would NOT offer a policy loan option?

    <p>Term life.</p> Signup and view all the answers

    Which dividend option will increase the death benefit?

    <p>Paid-up additions.</p> Signup and view all the answers

    When must the policy summary be given to the policyowner if not provided during application?

    <p>When the policy is delivered.</p> Signup and view all the answers

    Who could most likely be issued a resident producer license?

    <p>Sally, who lives in a neighboring state but has an office in New Jersey.</p> Signup and view all the answers

    Which policy rider should be recommended for a couple purchasing a life insurance policy on their newborn baby to cover premium payments due to death or disability?

    <p>Payor benefit.</p> Signup and view all the answers

    All of the following are true of credit life EXCEPT?

    <p>The insured names the beneficiary.</p> Signup and view all the answers

    All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT?

    <p>Reports may be sent to anyone who requests one.</p> Signup and view all the answers

    Is it possible for a whole life policy to include a Waiver of Cost of Insurance rider if the insured becomes severely disabled?

    <p>No, it is not possible.</p> Signup and view all the answers

    If a licensee wants to transact insurance under a different name, what must occur?

    <p>The change must be filed with the Department.</p> Signup and view all the answers

    What does the family term rider incorporate?

    <p>Spouse term and children's term.</p> Signup and view all the answers

    Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?

    <p>Charging the insured higher premiums based on her race.</p> Signup and view all the answers

    What happens to the cash value in a reduced-paid up policy after surrendering a whole life policy?

    <p>Continue to increase.</p> Signup and view all the answers

    When an insured terminates membership in the insured group, what can they convert to?

    <p>Whole life without proof of insurability.</p> Signup and view all the answers

    All of the following are true of a nonqualified deferred compensation plan EXCEPT?

    <p>Contributions are tax deductible.</p> Signup and view all the answers

    What does the state Life and Health Insurance Guaranty Association guard against?

    <p>Insurance insolvency.</p> Signup and view all the answers

    What happens to the face amount of a whole life policy if the insured reaches the age of 100?

    <p>The face amount is paid to the insured.</p> Signup and view all the answers

    What term describes the action of an agent guaranteeing higher dividends than possible?

    <p>Misrepresentation.</p> Signup and view all the answers

    What does the renewable provision allow the policyowner to do?

    <p>Renew the coverage at the expiration date without evidence of insurability.</p> Signup and view all the answers

    Study Notes

    Life Insurance Concepts

    • Convertible term life insurance allows policyholders to switch to a whole life policy for the same amount without proving insurability.
    • Policy replacement occurs when a new policy is issued with a lower cash value.
    • Cash value guarantees in whole life policies are termed nonforfeiture values.

    Policy Options and Benefits

    • The Joint and Survivor settlement option ensures income for both beneficiaries for life.
    • Paid-up additions are dividend options that increase the death benefit.
    • Payor benefit rider protects policy payments in case of the policyholder’s death or disability.

    Regulatory Framework

    • The McCarran-Ferguson Act states that insurance will be regulated by states as long as they maintain adequate regulations.
    • The Fair Credit Reporting Act limits who can receive consumer reports; reports are not accessible to everyone who requests them.

    Application and Eligibility

    • Life insurance applications should not require current health insurance policies in force.
    • Surplus lines authority applicants do not need a certificate of authority in the state.
    • For resident producer licenses, a person must be a state resident or have a registered office in the state.

    Policy Limitations and Provisions

    • Term life policies do not offer the option for policy loans.
    • Whole life policies cannot include a Waiver of Cost of Insurance rider.
    • If a group insured member terminates, they can convert to a whole life policy without proving insurability.

    Financial Insights

    • Nonqualified deferred compensation plan contributions are not tax-deductible.
    • The face amount of a whole life policy is paid when the insured reaches age 100.

    Ethical Practices

    • Discrimination in insurance includes charging different premiums based on race.
    • Misrepresentation occurs when an agent exaggerates policy benefits, such as guaranteeing unrealistic dividends.

    Other Relevant Information

    • A surrendered whole life policy for a reduced-paid up policy retains cash value that continues to increase.
    • The Life and Health Insurance Guaranty Association protects against insurance company insolvency.

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    Description

    Test your knowledge of life insurance terms with these flashcards. Each card presents a definition and a corresponding word related to various insurance policies. Perfect for anyone studying insurance concepts or preparing for a certification exam.

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