Podcast
Questions and Answers
What is a profit sharing plan?
What is a profit sharing plan?
A profit sharing plan is where the employer contributes money to an employee's retirement plan when the company shows a profit.
What provision prevents a beneficiary from changing or borrowing from planned installments in a life insurance policy?
What provision prevents a beneficiary from changing or borrowing from planned installments in a life insurance policy?
Spendthrift provision
Which factor determines the length of time that benefits will be received under the Fixed Amount settlement option?
Which factor determines the length of time that benefits will be received under the Fixed Amount settlement option?
Size of each installment
What will be included in a policy summary?
What will be included in a policy summary?
Signup and view all the answers
What would be the face amount of a new term policy if the insured cancels a $50,000 whole life policy?
What would be the face amount of a new term policy if the insured cancels a $50,000 whole life policy?
Signup and view all the answers
Which policy provision allows an insured to reactivate a lapsed life insurance policy?
Which policy provision allows an insured to reactivate a lapsed life insurance policy?
Signup and view all the answers
A tax sheltered annuity is a special tax favored retirement plan available to whom?
A tax sheltered annuity is a special tax favored retirement plan available to whom?
Signup and view all the answers
What are groups formed when several related small companies join forces to create a large pool of insured individuals?
What are groups formed when several related small companies join forces to create a large pool of insured individuals?
Signup and view all the answers
Once a policy is surrendered for its cash value, coverage ends and the policy can be reinstated.
Once a policy is surrendered for its cash value, coverage ends and the policy can be reinstated.
Signup and view all the answers
What is the maximum penalty for habitual noncompliance with the Fair Credit Reporting Act?
What is the maximum penalty for habitual noncompliance with the Fair Credit Reporting Act?
Signup and view all the answers
What effect does the Accelerated Benefit provision have on the benefits paid to the beneficiary?
What effect does the Accelerated Benefit provision have on the benefits paid to the beneficiary?
Signup and view all the answers
If a beneficiary wanted a guarantee that benefits would be paid for a period of 10 years, what would they select?
If a beneficiary wanted a guarantee that benefits would be paid for a period of 10 years, what would they select?
Signup and view all the answers
What is the benefit of choosing extended term as a nonforfeiture option?
What is the benefit of choosing extended term as a nonforfeiture option?
Signup and view all the answers
How many days must a person comply with a request from the Commissioner if no time is specified?
How many days must a person comply with a request from the Commissioner if no time is specified?
Signup and view all the answers
Which of the following is NOT an appropriate use of a deferred annuity?
Which of the following is NOT an appropriate use of a deferred annuity?
Signup and view all the answers
What happens to premiums if a father with a Payor Benefit Rider becomes disabled?
What happens to premiums if a father with a Payor Benefit Rider becomes disabled?
Signup and view all the answers
Nonforfeiture values are required by state law to be included in the policy.
Nonforfeiture values are required by state law to be included in the policy.
Signup and view all the answers
How long does a licensed insurance producer have to notify the Commissioner of a change of address?
How long does a licensed insurance producer have to notify the Commissioner of a change of address?
Signup and view all the answers
What does the insuring clause state?
What does the insuring clause state?
Signup and view all the answers
How many hours must a person work for the Keogh plan to be effective?
How many hours must a person work for the Keogh plan to be effective?
Signup and view all the answers
Are disputes regarding consumer information considered negative information according to the Fair Credit Reporting Act?
Are disputes regarding consumer information considered negative information according to the Fair Credit Reporting Act?
Signup and view all the answers
What type of term is credit life insurance issued on when the debt is being repaid?
What type of term is credit life insurance issued on when the debt is being repaid?
Signup and view all the answers
What is misrepresentation in insurance?
What is misrepresentation in insurance?
Signup and view all the answers
What is the term for how frequently a policyowner is required to pay the policy premium?
What is the term for how frequently a policyowner is required to pay the policy premium?
Signup and view all the answers
A tax sheltered annuity is available to which groups of people?
A tax sheltered annuity is available to which groups of people?
Signup and view all the answers
What happens if a policy owner fails to pay the premium after the grace period?
What happens if a policy owner fails to pay the premium after the grace period?
Signup and view all the answers
What is a partnership buy-sell agreement called when each partner buys insurance on the life of the other?
What is a partnership buy-sell agreement called when each partner buys insurance on the life of the other?
Signup and view all the answers
What do equity indexed annuities invest in?
What do equity indexed annuities invest in?
Signup and view all the answers
What does the other insurance provision define?
What does the other insurance provision define?
Signup and view all the answers
What does credit insurance cover?
What does credit insurance cover?
Signup and view all the answers
How long does a licensed producer have to notify the Commissioner of change of address or phone?
How long does a licensed producer have to notify the Commissioner of change of address or phone?
Signup and view all the answers
What does the term 'insuring clause' refer to in insurance?
What does the term 'insuring clause' refer to in insurance?
Signup and view all the answers
What is the relationship between the two types of assignment in insurance?
What is the relationship between the two types of assignment in insurance?
Signup and view all the answers
What does survivorship mean in terms of insurance benefits?
What does survivorship mean in terms of insurance benefits?
Signup and view all the answers
What type of life insurance provides temporary protection lasting for a specified period?
What type of life insurance provides temporary protection lasting for a specified period?
Signup and view all the answers
What distinguishes level term life insurance?
What distinguishes level term life insurance?
Signup and view all the answers
What is an increasing term policy?
What is an increasing term policy?
Signup and view all the answers
What is the face value of a life insurance policy?
What is the face value of a life insurance policy?
Signup and view all the answers
What describes a decreasing term policy?
What describes a decreasing term policy?
Signup and view all the answers
Whole life insurance provides permanent protection.
Whole life insurance provides permanent protection.
Signup and view all the answers
Does a straight life policy build cash value?
Does a straight life policy build cash value?
Signup and view all the answers
What is a limited pay whole life policy?
What is a limited pay whole life policy?
Signup and view all the answers
What is the purpose of a single premium whole life policy?
What is the purpose of a single premium whole life policy?
Signup and view all the answers
What must an insurer present to an applicant to obtain information?
What must an insurer present to an applicant to obtain information?
Signup and view all the answers
When does a 20 pay whole life policy endow?
When does a 20 pay whole life policy endow?
Signup and view all the answers
What type of retirement account allows contributions after age 70 1/2 without taxes on growth?
What type of retirement account allows contributions after age 70 1/2 without taxes on growth?
Signup and view all the answers
What is the one-year term option in dividend options?
What is the one-year term option in dividend options?
Signup and view all the answers
What describes a nonqualified annuity plan?
What describes a nonqualified annuity plan?
Signup and view all the answers
What is a joint life policy?
What is a joint life policy?
Signup and view all the answers
What is an accelerated benefit provision?
What is an accelerated benefit provision?
Signup and view all the answers
What defines a modified endowment contract?
What defines a modified endowment contract?
Signup and view all the answers
Which provision makes a contract complete?
Which provision makes a contract complete?
Signup and view all the answers
Which rider would not cause a death benefit to increase?
Which rider would not cause a death benefit to increase?
Signup and view all the answers
What can an adjustable life policyowner change?
What can an adjustable life policyowner change?
Signup and view all the answers
What type of insurance company returns surplus money to policyholders?
What type of insurance company returns surplus money to policyholders?
Signup and view all the answers
For an individual not covered by an employer-sponsored plan, how are IRA contributions classified?
For an individual not covered by an employer-sponsored plan, how are IRA contributions classified?
Signup and view all the answers
How long does the Commissioner have to file a report after an examination?
How long does the Commissioner have to file a report after an examination?
Signup and view all the answers
In variable annuities, who assumes the investment risks?
In variable annuities, who assumes the investment risks?
Signup and view all the answers
What is the paid-up option in life insurance?
What is the paid-up option in life insurance?
Signup and view all the answers
After an insurance company examination, how long must the report be filed?
After an insurance company examination, how long must the report be filed?
Signup and view all the answers
Which is NOT true about beneficiary designations?
Which is NOT true about beneficiary designations?
Signup and view all the answers
What is a Stoli policy?
What is a Stoli policy?
Signup and view all the answers
What defines a peril in insurance terms?
What defines a peril in insurance terms?
Signup and view all the answers
When does coverage become effective if the full premium is submitted with the application?
When does coverage become effective if the full premium is submitted with the application?
Signup and view all the answers
What best describes fixed period settlement options?
What best describes fixed period settlement options?
Signup and view all the answers
What do equity indexed annuities seek?
What do equity indexed annuities seek?
Signup and view all the answers
Which of the following is a nonqualified retirement plan?
Which of the following is a nonqualified retirement plan?
Signup and view all the answers
What will a beneficiary receive if a life insurance policy does not have a war clause?
What will a beneficiary receive if a life insurance policy does not have a war clause?
Signup and view all the answers
Which of the following is an example of a limited pay life policy?
Which of the following is an example of a limited pay life policy?
Signup and view all the answers
What is NOT true regarding a Certificate of Authority?
What is NOT true regarding a Certificate of Authority?
Signup and view all the answers
How often must an agent complete ongoing training to sell long-term care insurance?
How often must an agent complete ongoing training to sell long-term care insurance?
Signup and view all the answers
Which of the following is NOT a primary way deductibles for major medical plans can be paid?
Which of the following is NOT a primary way deductibles for major medical plans can be paid?
Signup and view all the answers
What requirement does a $100,000 Annually Renewable Term Life policy have?
What requirement does a $100,000 Annually Renewable Term Life policy have?
Signup and view all the answers
The spouse term rider typically offers level term insurance.
The spouse term rider typically offers level term insurance.
Signup and view all the answers
How often must agents complete ongoing training for long term care insurance?
How often must agents complete ongoing training for long term care insurance?
Signup and view all the answers
What will the beneficiary receive from a life insurance policy without a war clause if the insured is killed during a war?
What will the beneficiary receive from a life insurance policy without a war clause if the insured is killed during a war?
Signup and view all the answers
Which of the following is NOT true regarding a Certificate of Authority?
Which of the following is NOT true regarding a Certificate of Authority?
Signup and view all the answers
What is an investor buying a life policy on an elderly person to sell for life settlement an example of?
What is an investor buying a life policy on an elderly person to sell for life settlement an example of?
Signup and view all the answers
What defines a peril?
What defines a peril?
Signup and view all the answers
What is required when the full premium is submitted with a life insurance application?
What is required when the full premium is submitted with a life insurance application?
Signup and view all the answers
What describes fixed period settlement options?
What describes fixed period settlement options?
Signup and view all the answers
What do equity indexed annuities aim for?
What do equity indexed annuities aim for?
Signup and view all the answers
Which of the following is a nonqualified retirement plan?
Which of the following is a nonqualified retirement plan?
Signup and view all the answers
What will beneficiaries receive from a life policy lacking a war clause?
What will beneficiaries receive from a life policy lacking a war clause?
Signup and view all the answers
What is an example of a limited pay life policy?
What is an example of a limited pay life policy?
Signup and view all the answers
Which is NOT true regarding a Certificate of Authority?
Which is NOT true regarding a Certificate of Authority?
Signup and view all the answers
When must agents complete ongoing training to maintain licensing for long term care insurance?
When must agents complete ongoing training to maintain licensing for long term care insurance?
Signup and view all the answers
Which of the following methods can major medical plan deductibles be paid?
Which of the following methods can major medical plan deductibles be paid?
Signup and view all the answers
What is required for an annually renewable term life policy?
What is required for an annually renewable term life policy?
Signup and view all the answers
The spouse term rider is typically level term insurance.
The spouse term rider is typically level term insurance.
Signup and view all the answers
How often do agents need to take training for long-term care insurance?
How often do agents need to take training for long-term care insurance?
Signup and view all the answers
What will beneficiaries receive if the insured with a war clause dies in war?
What will beneficiaries receive if the insured with a war clause dies in war?
Signup and view all the answers
Which is an example of a limited-pay life policy?
Which is an example of a limited-pay life policy?
Signup and view all the answers
What is NOT true about a Certificate of Authority?
What is NOT true about a Certificate of Authority?
Signup and view all the answers
What is an STOLI policy?
What is an STOLI policy?
Signup and view all the answers
What does a peril define in insurance?
What does a peril define in insurance?
Signup and view all the answers
What is the effective date of coverage with a full premium submission?
What is the effective date of coverage with a full premium submission?
Signup and view all the answers
What best describes fixed period settlement options?
What best describes fixed period settlement options?
Signup and view all the answers
What do equity indexed annuities aim for?
What do equity indexed annuities aim for?
Signup and view all the answers
Which of the following illustrates a nonqualified retirement plan?
Which of the following illustrates a nonqualified retirement plan?
Signup and view all the answers
What will the beneficiary receive if there's no war clause when the insured dies during a war?
What will the beneficiary receive if there's no war clause when the insured dies during a war?
Signup and view all the answers
Which is an example of a limited pay life policy?
Which is an example of a limited pay life policy?
Signup and view all the answers
Which is NOT true regarding a Certificate of Authority?
Which is NOT true regarding a Certificate of Authority?
Signup and view all the answers
Study Notes
Life Insurance Key Concepts
- Term Life Insurance: Temporary protection for a specific period, pays death benefit if insured dies during that term; offers maximum coverage for lowest premiums; pure death protection.
- Level Term Life Insurance: Premiums remain consistent throughout the policy's life.
- Increasing Term Policy: Features a level premium, but the face amount increases annually.
- Face Value: Refers to the death benefit of a life insurance policy.
- Decreasing Term Policy: Consists of level premiums with a decreasing death benefit, commonly used in mortgage protection.
Whole Life Insurance Features
- Whole Life Insurance: Permanent protection as long as premiums are paid; death benefits and premiums are guaranteed.
- Cash Value Accumulation: Premiums remain unchanged through the policy life, allowing cash value growth.
- Straight Life: Continuous premium payment with a guaranteed death benefit; lowest annual premium among whole life options.
- Limited Pay Whole Life: Requires premiums for a specified number of years; remains in force for the lifetime after premium payment.
- Single Premium Whole Life: Requires one lump sum payment for a level death benefit, generating immediate cash value.
Special Provisions and Options
- Disclosure Authorization Notice: Required when an insurer seeks information from an applicant.
- One Year Term Option: Policyowner uses dividends to purchase a term policy for one year.
- Nonqualified Annuity Plan: Offered selectively to certain employees, funded with before-tax corporate dollars, not government-regulated.
- Accelerated Benefit Provision: Allows early payment of part of the face value due to terminal illness, paid without a premium increase.
Annuities and Benefits
- Variable Annuities: Risks are assumed by the annuitant; investment performance varies.
- Paid-Up Option: Dividends accumulated at interest and combined with cash value to pay off policy early.
- Income Benefit Rider: Provides monthly income during a disability period while waiving policy premiums.
Retirement and Tax Considerations
- ROTH IRA: Allows tax-free growth without taxes on contributions after age 70½ for non-covered individuals.
- Tax Deductibility of Premiums: Premiums paid on group term life insurance plans for employees are deductible.
Beneficiary Designations and Rights
- Beneficiary Designations: Beneficiaries do not need insurable interest in the insured; rights vary based on designation (revocable vs. irrevocable).
- Owner's Rights: Include the ability to change beneficiaries, choose options, and receive proceeds.
- Spendthrift Provision: Prevents beneficiaries from changing payment terms, borrowing, or assigning benefits.
Policy Mechanics and Regulations
- Commencement of Coverage: Effective date coincides with the application date if full premium is submitted.
- Fixed Period Settlement Options: Payments liquidate both principal and interest over a selected period.
- Certificate of Authority: Required for insurers to operate in a state; not issued to group participants.
Special Policies and Situations
- STOLI Policy: Life policies purchased by investors with no relationship to the insured for future sale.
- Extended Term Nonforfeiture Option: Converts cash value to term insurance at the same face amount as the whole life policy.
- Profit Sharing Plan: Contributions from employers based on company profits.
Claim Procedures and Finally
- Insurance Coverage: For individuals with no war clause, beneficiaries receive the full death benefit during wartime.
- Policy Summary: Includes important details like premium amounts and surrender values.
- Reactivation of Lapsed Policy: Allowed with timely proof of insurability under specific policy provisions.### Reinstatement Provision
- Allows policyholders to restore a lapsed policy under certain conditions, but may not apply after a cash surrender.
Tax Sheltered Annuity
- A retirement plan that offers tax advantages exclusively to specific groups like nonprofit and educational employees.
Multiple Employer Trust (MET)
- A collaborative agreement among similar small companies that enables them to provide a collective insurance benefit plan for their employees.
Cash Surrender Option
- Termination of the policy occurs when cash value is taken; coverage cannot be reinstated afterward.
Fair Credit Reporting Act Penalty
- Maximum penalty for habitual noncompliance can reach $2,500 for intentional violations.
Accelerated Benefit Provision
- Reduces the total benefits available to beneficiaries when early payout is taken.
Fixed Period Benefits
- Allows beneficiaries to select a guaranteed payout period, with the insurer determining installment amounts.
Extended Term Nonforfeiture Option
- Provides the highest insurance protection by converting cash value into term insurance equivalent to the original policy’s face value.
Compliance with Commissioner Requests
- Individuals must respond to information requests from the Commissioner within 30 days if no time frame is specified.
Deferred Anuity Use
- Best utilized for accumulating retirement income or education funds; not suitable for estate creation.
Payor Benefit Rider
- Waives premiums for the insured child until age 21 if the policyholder becomes disabled.
Nonforfeiture Values
- Required by state law to be included in life insurance policies, with a mandatory disclosure table for the next 20 years.
Notification for Address Change
- Licensed insurance producers must inform the Commissioner within 10 days of a change in address.
Insuring Clause
- Details the insurer's obligation to pay death benefits and specifies the recipient of these benefits.
Keogh Plan Requirements
- An individual must work at least 1,000 hours per year for the plan to be effective.
Fair Credit Reporting Act on Disputes
- Disputes involving consumer information are not classified as negative information under the act.
Credit Life Insurance Structure
- Issued as decreasing term insurance to align repayment with the debt owed to creditors on an installment basis.
Misrepresentation in Insurance
- Involves any false, misleading, or deceptive information regarding policy benefits or terms, which can include oral statements.
Premium Payment Frequency
- "Mode" refers to how often a policyholder must make premium payments.
Automatic Premium Loan
- Prevents unintended policy lapse due to premium nonpayment by automatically borrowing from the policy's cash value.
Cross Purchase Plan
- A buy-sell agreement where partners purchase insurance on each other's lives, serving as owner, payor, and beneficiary.
Equity Indexed Annuities
- Offer higher returns with guaranteed minimum interest rates, carrying less risk than variable annuities.
Other Insurance Provision
- Details the payment hierarchy among multiple insurance policies in effect.
Credit Insurance
- Designed to cover the life of an individual debtor to ensure repayment of debt obligations.
Change Notification Period
- Licensed producers are required to notify the Commissioner of changes in contact information within 10 days.
Insuring Clause Reiterated
- Contains the insurer's promise to pay benefits under the terms of the policy.
Mutual Insurance Company
- Provides dividend checks to its policyholders as a return on surplus.
Types of Insurance Assignment
- Two categories exist: absolute assignment, which transfers full benefits, and collateral assignment, which secures loans against the policy.
Survivorship Benefits
- Allow a surviving beneficiary to receive two-thirds of the benefits paid while both beneficiaries were alive.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge of life insurance terms and concepts with these flashcards. Learn about various types of policies, such as term life insurance and level term life insurance. This quiz is perfect for anyone interested in understanding how life insurance works.