Questions and Answers
What is a 401k plan?
What does Absolute Assignment refer to in insurance?
What is Collateral Assignment?
What allows full or partial payment of the death benefit before the insured's death?
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What is an Accidental Death Benefit?
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What is the 'Accumulate at Interest' Dividend Option?
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The contract created by the insurer is in favor of the insured regarding ambiguities.
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What is Adverse Selection in insurance?
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What is indicated by an Agency Agreement or Agency Contract?
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What are 'Agent Authorities'?
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Who is referred to as an Agent/Producer?
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What is an Agent's Report?
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What does the term Aleatory refer to?
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What is an Annual Renewable Term?
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Who is an Annuitant?
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What is an Annuity?
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What does Appointment refer to in insurance?
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What is a Blackout Period?
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What is a Buy-Sell Agreement?
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What is the Cash Nonforfeiture Option?
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What is the Cash Settlement Option?
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What is Cash Value in an insurance policy?
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Who is a Commissioner in insurance?
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Study Notes
Retirement and Insurance Concepts
- 401k Plan: A qualified retirement plan allowing employees to save a portion of their income using pre-tax dollars, promoting tax advantages for retirement savings.
- Accelerated Death Benefit: A policy provision enabling the insured to receive all or part of the death benefit if diagnosed with a terminal illness, providing financial assistance during difficult times.
- Buy-Sell Agreement: A life insurance strategy for businesses where partners insure each other's lives, ensuring the surviving partners can buy the deceased's share, maintaining business continuity.
Assignment Types
- Absolute Assignment: A permanent and irrevocable transfer of a policy's rights or benefits from the policy owner, often used to secure loans against the policy.
- Collateral Assignment: A temporary and revocable transfer of benefits, commonly utilized to secure a loan while retaining ownership rights.
Insurance Provisions
- Accidental Death Benefit: An optional rider ensuring an additional payout if the insured dies due to an accident within 90 days, offering added security for beneficiaries.
- Cash Nonforfeiture Option: Allows the policyowner to receive a lump-sum payment for the policy's current cash value upon surrender, with no option for reinstatement.
Dividend and Policy Options
- Accumulate at Interest: A dividend option where dividends are left with the insurer to grow and earn interest, providing additional value to the policy.
- Cash Settlement Option: Upon policy maturity, beneficiaries receive the entire proceeds as a lump-sum payment, providing immediate financial support.
Legal and Regulatory Aspects
- Agency Agreement: A legal contract defining the relationship between an agent and an insurance company, specifying agent actions and compensation.
- Commissioner: A state public official overseeing the insurance department, responsible for enforcing insurance laws and regulations.
Roles and Responsibilities
- Agent/Producer: Individuals who sell or assist in the sale of insurance, officially representing the insurer and acting in the best interest of clients.
- Agent's Report: A documented disclosure from the agent to the insurer detailing observations about the proposed insured's risks, crucial for underwriting decisions.
Risk and Contract Principles
- Adverse Selection: A phenomenon where individuals with higher risk are more likely to seek insurance coverage, potentially leading to increased costs for insurers.
- Aleatory Contract: An agreement characterized by an unequal exchange of value, where one party may gain significantly more than the other, typical in insurance policies.
Other Important Terms
- Annual Renewable Term: A life insurance type allowing yearly renewal without proof of insurability, with premiums that increase at each renewal, catering to short-term insurance needs.
- Cash Value: The portion of a policy representing the equity that can be accessed by the policyowner, also referred to as living benefit or policy savings, accumulating over time.
- Blackout Period: The interval when Social Security Survivor Benefits are unavailable to a widow(er), occurring between the youngest child turning 16 and the widow(er) reaching retirement age.
- Appointment: The process through which an insurer officially authorizes an agent to represent them, establishing a formal relationship for selling insurance products.
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Description
Test your understanding of key retirement and insurance concepts, including 401k plans, accelerated death benefits, and buy-sell agreements. Learn how these concepts impact financial decision-making and business continuity. Perfect for students and professionals in finance or insurance fields.
