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Questions and Answers
What is a characteristic of permanent life insurance?
What is a characteristic of permanent life insurance?
- It provides coverage for a specified term.
- It has lower premiums that decrease with age.
- It offers insurance protection for the entire lifetime as long as premiums are paid. (correct)
- It does not accumulate cash value.
Which type of insurance is commonly used to cover temporary needs such as a mortgage?
Which type of insurance is commonly used to cover temporary needs such as a mortgage?
- Universal life insurance
- Variable life insurance
- Permanent insurance
- Term insurance (correct)
What is a common use of permanent life insurance?
What is a common use of permanent life insurance?
- To fund short-term liabilities.
- To cover capital gains taxes at death. (correct)
- To provide accident coverage.
- To insure property against theft.
What should be reviewed regularly concerning life insurance needs?
What should be reviewed regularly concerning life insurance needs?
Which of the following is NOT typically a reason for choosing permanent life insurance?
Which of the following is NOT typically a reason for choosing permanent life insurance?
What happens to the premiums of most permanent life insurance policies?
What happens to the premiums of most permanent life insurance policies?
How can withdrawing cash value from a permanent life insurance policy affect taxes?
How can withdrawing cash value from a permanent life insurance policy affect taxes?
What is the primary benefit of guaranteed issue plans?
What is the primary benefit of guaranteed issue plans?
What are living benefits in life insurance policies designed to assist with?
What are living benefits in life insurance policies designed to assist with?
Which condition must typically be met to claim living benefits from a life insurance policy?
Which condition must typically be met to claim living benefits from a life insurance policy?
What is a common reason for parents to purchase life insurance for their children?
What is a common reason for parents to purchase life insurance for their children?
What usually happens to the death benefit amount when living benefits are claimed?
What usually happens to the death benefit amount when living benefits are claimed?
Which of the following describes a guaranteed insurability rider?
Which of the following describes a guaranteed insurability rider?
Why is it unusual for children to be primary sources of income for their families?
Why is it unusual for children to be primary sources of income for their families?
What is often a requirement when claiming living benefits from a life insurance policy?
What is often a requirement when claiming living benefits from a life insurance policy?
What amount of insurance on children do some parents typically arrange through riders?
What amount of insurance on children do some parents typically arrange through riders?
What is the primary purpose of creditor group insurance?
What is the primary purpose of creditor group insurance?
Which of the following may affect claims made on creditor group insurance?
Which of the following may affect claims made on creditor group insurance?
Which group offers association insurance that can help with life, health, and disability coverage?
Which group offers association insurance that can help with life, health, and disability coverage?
What is an important consideration when obtaining association insurance?
What is an important consideration when obtaining association insurance?
What is the main characteristic of guaranteed issue plans?
What is the main characteristic of guaranteed issue plans?
Which age group can typically obtain guaranteed issue life insurance, and for what maximum amount?
Which age group can typically obtain guaranteed issue life insurance, and for what maximum amount?
What should individuals review when considering a guaranteed issue policy?
What should individuals review when considering a guaranteed issue policy?
Why might older individuals seek additional life insurance?
Why might older individuals seek additional life insurance?
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Study Notes
Living Benefits
- Living benefits allow terminally ill individuals to access a portion of their life insurance death benefit before death, helping cover care costs.
- A medical documentation confirming terminal illness is typically required to claim living benefits, with some policies needing beneficiary acknowledgment.
- Life insurance for children is primarily arranged for financial security, usually requiring a smaller amount of coverage.
- Parents may secure child insurance through riders on personal policies or group employer insurance, often with low premiums.
Creditor Group Insurance
- Creditor group insurance repays loans in the event of the borrower’s death or disability, often offered through financial institutions.
- Important to check policy exclusions, such as pre-existing conditions and age limits, before signing.
Association Insurance
- Association insurance offers life, health, and disability coverage through professional organizations and clubs, providing potential cost savings.
- These plans can be terminated or altered by the sponsoring group, signaling the need for regular insurance reviews.
Insurance for Older Individuals
- Older adults can find life insurance products even if health issues exist, with guaranteed issue plans often available for ages 50 to 75.
- Guaranteed issue policies typically provide coverage up to $25,000 without medical questions but may have restrictions during the initial years.
Life Insurance Policies Overview
- Two main types of life insurance: permanent and term, with permanent insurance suited for long-term needs and term for temporary.
- Temporary needs include mortgages and dependent children's needs; permanent needs cover expenses like funeral costs and taxes upon death.
- Permanent life insurance includes variations like whole life, universal life, and variable life, providing lifetime coverage as long as premiums are maintained.
Permanent Life Insurance Features
- Permanent policies feature level premiums, which remain constant despite increasing death risk with age.
- Policyholders should evaluate tax implications before withdrawing cash value from permanent insurance, as earnings may be taxable.
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