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Questions and Answers
What is a characteristic of permanent life insurance?
Which type of insurance is commonly used to cover temporary needs such as a mortgage?
What is a common use of permanent life insurance?
What should be reviewed regularly concerning life insurance needs?
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Which of the following is NOT typically a reason for choosing permanent life insurance?
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What happens to the premiums of most permanent life insurance policies?
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How can withdrawing cash value from a permanent life insurance policy affect taxes?
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What is the primary benefit of guaranteed issue plans?
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What are living benefits in life insurance policies designed to assist with?
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Which condition must typically be met to claim living benefits from a life insurance policy?
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What is a common reason for parents to purchase life insurance for their children?
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What usually happens to the death benefit amount when living benefits are claimed?
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Which of the following describes a guaranteed insurability rider?
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Why is it unusual for children to be primary sources of income for their families?
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What is often a requirement when claiming living benefits from a life insurance policy?
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What amount of insurance on children do some parents typically arrange through riders?
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What is the primary purpose of creditor group insurance?
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Which of the following may affect claims made on creditor group insurance?
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Which group offers association insurance that can help with life, health, and disability coverage?
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What is an important consideration when obtaining association insurance?
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What is the main characteristic of guaranteed issue plans?
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Which age group can typically obtain guaranteed issue life insurance, and for what maximum amount?
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What should individuals review when considering a guaranteed issue policy?
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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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