License Exam: Life Basics And Types Of Life (I & Ii)

Front 1

Policyowner of a Life Policy must have _____ in life of insured.

Back 1

Insurable Interest

Front 2

Who of the following can you not insure the life of?

A) Rich Aunt

B) Yourself

C) Your Spouse

D) Your Business Partner

E) Your Favorite Bartender

Back 2

E; you have no Insurable interest in your bartender

Front 3

Whom might you be able to insure the life of depending on the case?

Back 3

Dating (not married),

Employer-> Employee

Front 4

Whom can you not take out life insurance policies on?

Back 4

Employee—> Employer

Landlord—> Tennant

Front 5

Does a man who has a life insurance policy on his ex-husband get benefits upon his ex’s death? Why?

Back 5

Yes; the insurable interest does NOT need to exist at the time of loss.

Front 6

What is the process for Personal Insurance Planning?

Back 6

1) Identify Goals

2) Gather Data

3) Create Plan based on Data

4) Regularly Monitor

Front 7

When considering how much financial loss a man’s family will incure, what factors does the Human Life Value Approach take into consideration?

Back 7

Income, Projected Raises, Household Services, Employment Benefits

Front 8

What is considered during a Needs Approach for a life insurance policy?

Back 8

Funeral Expenses, Medical Expenses, Emergency Fund, Mortgage, Debts/Loans, Childcare, Legal Fees, Estate Taxes, Educational Expenses, Business Buyout

Front 9

What is the amount the insurer is obligated to pay out for a death benefit called?

Back 9

Limit of Liability

Front 10

How do you calculate the Limit of Liability?

Back 10

$150,000 (Face Amount)

- $4,000 (Policy Loan)

- $1,000 (Policy Interest)

——————

$145,000 ( Limit if Liability)

Front 11

What does “Life Insurance creates an Immediate Estate” mean?

Back 11

Instead of saving to leave something after you die, a life insurance policy Is an easy way to leave something to those you love.

Front 12

What are the Personal Uses of Life Insurance?

Back 12

Provide Income, Pay for Medical/Funeral Cost, Payoff Mortgages and Loans

Front 13

What are some Business Uses of Life Insurance?

Back 13

Salary Continuation, Overhead Expenses, Split Dollar Insurance, Key Person Insurance

Front 14

What Uses are Key Employee Insurance benefits permitted?

Back 14

Recruiting and training replacement, lost profits, assure potential creditors

Front 15

Buy-Sell Agreements govern what happens to co-partnerships if _________.

Back 15

One partner dies or leaves

Front 16

When an employer offers to split a life insurance policy it is called ______.

Back 16

Split Dollar Life Insurance

Front 17

A company is allowed to take out a life insurance policy on an employee when they use a _____ , a plan to defer parts of payment to accumulate for retirement.

Back 17

Non Qualified Deferred Compensation Plan

Front 18

The Salary Continuation Plan is a plan where employees make continued income after retirement and is reserved for ____.

Back 18

Key Personelle

Front 19

What is the typical Mortality Rate expressed in?

Back 19

/1000 people per year

Front 20

What do Mortality Tables separate people as?

Back 20

Make and female

Front 21

Types of Life Insurance?

Back 21

Back (Definition)

Front 22

What is it called when a Life Insurance Policy pays out if insured does in a specific term?

Back 22

Term Life Insurance

Front 23

What does a Term Life Insurance Cover? (Lets say $500,000 20-Year Term)

Back 23

Mortgage, Loans, Children -18

Front 24

Can you take out CV for Term Life Insurance?

Back 24

No

Front 25

What are some common Terms for Terms Life Ins?

Back 25

1, 5, 10, 15, 20, 25, 30 yr terms

Front 26

What’s the most affordable life insurance policy?

Back 26

Term Life Insurance

Front 27

What kind of face amounts are there?

Back 27

Level, increasing, and decreasing

Front 28

What are the payouts for a $100,000 15-year policy for a Level Term, Decreasing Term, and Increasing Term?

Back 28

Level- $100,000

Decreasing- <$100,000

Increasing- >$100,000

Front 29

When an insured person dies holding a Mortgage Redeptiom Insurance (decreasing term ins) whenpolicy what is the amount the policy pays out?

Back 29

The amount of the rest of the mortgage

Front 30

What is it called when someone can take a Term Policy and convert part or all of it to a permanent plan (without need for Evidence of Insurability)?

Back 30

Term Conversion Provision

Front 31

What happens to the Policyholder’s premium every time they renew a Renewable Term Lease (without EoI)?

Back 31

They have to pay a higher premium

Front 32

In Term Life Policies, is the greater or lesser Term length more expensive premiums?

Back 32

Greater length of term= greater premium

Front 33

What is the difference between a Guaranteed, Indeterminate, and Non-Guaranteed Premium Types?

Back 33

Guaranteed- premiums cannot change

Indeterminate- premiums can go up to a max amount after initial fixed period

Non-Guaranteed- premiums increase after initial fixed period with no cap

Front 34

What are the types of insurance under the umbrella of Permanent Life Insurance?

Back 34

Whole Life, Universal Life, Variable Life, and Variable Universal Life

Front 35

What are some typical term lengths in Whole Life Policies?

Back 35

Till you turn 100 or 121

Front 36

What is the Level Premium Concept?

Back 36

Premiums remain level throughout policy by starting higher than it should be at initiating the policy

Front 37

What is the issue of a whole life insurance policy if you live past the age of maturity and what is a possibly solution?

Back 37

The cash value is tax deductible if cashed out; a Maturity Extention Rider can be added

Front 38

When an insurer loans an insured person money it’s called _____ and uses the policy’s _____ as collateral.

Back 38

Policy Loan; cash value

Front 39

Benefits of Policy Loan?

Back 39

Loan interest can be fixed or variable. Interest accrued. No fixed time for repayment. Upon insured death, loan and interest can be taken from benefits.

Front 40

What are the benefits and detriments of a Limited Pay Whole Life Policy?

Back 40

You only pay for a set amount of years and the coverage lasts your whole life (whether a set term of years or at an age).

Higher Premiums

Front 41

What is a Life Paid Up at Age 65 look like compared to other types of Limited Pay Whole Life Insurance Plans?

Back 41

Steady throughout life

Front 42

What is the difference between a Guaranteed, Indeterminate, and Non-Guaranteed Premium Types?

Back 42

Guaranteed- premiums cannot change

Indeterminate- premiums can go up to a max amount after initial fixed period

Non-Guaranteed- premiums increase after initial fixed period with no cap

Front 43

What are the types of insurance under the umbrella of Permanent Life Insurance?

Back 43

Whole Life, Universal Life, Variable Life, and Variable Universal Life

Front 44

What are some typical term lengths in Whole Life Policies?

Back 44

Till you turn 100 or 121

Front 45

What is the Level Premium Concept?

Back 45

Premiums remain level throughout policy by starting higher than it should be at initiating the policy

Front 46

What is the issue of a whole life insurance policy if you live past the age of maturity and what is a possibly solution?

Back 46

The cash value is tax deductible if cashed out; a Maturity Extention Rider can be added

Front 47

When an insurer loans an insured person money it’s called _____ and uses the policy’s _____ as collateral.

Back 47

Policy Loan; cash value

Front 48

Benefits of Policy Loan?

Back 48

Loan interest can be fixed or variable. Interest accrued. No fixed time for repayment. Upon insured death, loan and interest can be taken from benefits.

Front 49

What are the benefits and detriments of a Limited Pay Whole Life Policy?

Back 49

You only pay for a set amount of years and the coverage lasts your whole life (whether a set term of years or at an age).

Higher Premiums

Front 50

What is a Life Paid Up at Age 65 look like compared to other types of Limited Pay Whole Life Insurance Plans?

Back 50

Steady throughout life

Front 51

What is the term used when no more premium payments must be made?

Back 51

Paid-Up

Front 52

What is the difference between a Guaranteed, Indeterminate, and Non-Guaranteed Premium Types?

Back 52

Guaranteed- premiums cannot change

Indeterminate- premiums can go up to a max amount after initial fixed period

Non-Guaranteed- premiums increase after initial fixed period with no cap

Front 53

The most expensive Limited Pay Whole Life Policy is the Single Premium Whole Life Policy where ___________ is made and the owner is insured for life.

Back 53

One payment

Front 54

What are the types of insurance under the umbrella of Permanent Life Insurance?

Back 54

Whole Life, Universal Life, Variable Life, and Variable Universal Life

Front 55

What are some typical term lengths in Whole Life Policies?

Back 55

Till you turn 100 or 121

Front 56

What is the Level Premium Concept?

Back 56

Premiums remain level throughout policy by starting higher than it should be at initiating the policy

Front 57

What is the issue of a whole life insurance policy if you live past the age of maturity and what is a possibly solution?

Back 57

The cash value is tax deductible if cashed out; a Maturity Extention Rider can be added

Front 58

When an insurer loans an insured person money it’s called _____ and uses the policy’s _____ as collateral.

Back 58

Policy Loan; cash value

Front 59

Benefits of Policy Loan?

Back 59

Loan interest can be fixed or variable. Interest accrued. No fixed time for repayment. Upon insured death, loan and interest can be taken from benefits.

Front 60

What is a Life Paid Up at Age 65 look like compared to other types of Limited Pay Whole Life Insurance Plans?

Back 60

Steady throughout life

Front 61

What is a Life Paid Up at Age 65 look like compared to other types of Limited Pay Whole Life Insurance Plans?

Back 61

Steady throughout life

Front 62

What is the term used when no more premium payments must be made?

Back 62

Paid-Up

Front 63

What are the Term & WL Policy Price ranges (estimated)?

Back 63

10,20,30 year term policies, continuous whole life, 10 pay life, single premium

Front 64

What is the whole life policy that has lesser premiums and then one increase somewhere between 3-5 called?

Back 64

Modified Whole Premium

Front 65

What is the whole life policy that has lesser premiums and then increases annually for 5-10 years called?

Back 65

Graded Premium Whole Life

Front 66

What is the term for a continuous whole life policy that has a less than standard maturity age?

Back 66

Endowment

Front 67

What are the big differences between Whole Life and Universal Life Policies?

Back 67

Whole:

-premiums must be paid exact amount, paid on time, Face Amount is fixed

Universal:

-premiums can vary, be payed on a more flexible schedule, the Face Amount can increase potentially

Front 68

What are the big differences between Whole Life and Universal Life Policies?

Back 68

Whole:

-premiums must be paid exact amount, paid on time, Face Amount is fixed

Universal:

-premiums can vary, be payed on a more flexible schedule, the Face Amount can increase potentially

Front 69

Account Value Mechanics (Cash Value Mechanics) of UL Policy

Back 69

+$1000 Acct. Balance

+$100 Premium

-$5 Premium Expense Charge (e.g. 5%)

-$7 Monthly Fee (e.g. $7/mo)

-$3.52 Mortality (monthly cost of insurance) (e.g. $3.52)

+$42 Monthly Interest Earned (e.g. $42)

——————

$1,126.48

Front 70

When does the Universal Life Policy lapse?

Back 70

When the policy has insufficient funds to support the policy (monthly charges)

Front 71

What is it called when your Universal Life Death Benefits aren’t enough and the insured needs to increase it?

Back 71

Universal Life Increasewhat

Front 72

What is a Bundled Policy? What is an example of one?

Back 72

Not Flexible/ Fixed

Whole Life Policies

Front 73

What is a Unbundled Policy? What is an example of one?

Back 73

Flexibility

Universal Life Policy

Front 74

What is the Insurer’s secondary accounts called?

Back 74

Separate Account (made up of sub accounts)

Front 75

Why does a Variable Life policy have the possibility of lower death benefits and/or Cash Value?

Back 75

Policyowner becomes liable for risk by choosing subaccounts to have their policy backed by (for possible larger benefits)

Front 76

Equity index only applies to _______ Insurance.

Back 76

Universal Live

Front 77

What are a few Equity Indexes a policy owner can use to back their Universal Life Policy?

Back 77

NASDAQ

DOW JONES

S&P 500

Front 78

Which Policy combines a WL Policy with Level Term Rider to cover a monthly income for the breadwinner’s family and a DB to be assigned after income runs out?

Back 78

Family Protection Policy

Front 79

What is a Family Policy?

Back 79

Combination of WL Policy with Term Riders to cover family.

Front 80

Where does an Insurer collect all incoming funds?

Back 80

General Account

Front 81

What are some perks of the Childrens’ Term Rider?

Back 81

New Children are automatically covered

Front 82

A ______ is a type of Rider that combines level term coverage on both a spouse and children.

Back 82

Family Rider

Front 83

_______ is a WL Policy of an insured minor (-16) which’s face value increases x5 when the insured turns 21.

Back 83

Jumping Juvenile

Front 84

What is the pay out for an Option 1 UL Policy Death Benefit?

Back 84

Basic Amount

Front 85

When do Joint Life Policies payout?

Back 85

After 1st Death

Front 86

What are some benefits of a Joint Life Policy? Detriments?

Back 86

Less expensive, can insure 2+ business partners

Surviving Spouse is Left without Insurance

Front 87

What’s the difference between Survivorship Life and Joint Life?

Back 87

Survivorship pays out after both deaths

Front 88

What are the benefits of a Survivorship Life?

Back 88

Typically larger face value

Ideal for paying estate taxes after death

Providing needs for special needs children/adults

Less expensive than separate insurances

Front 89

What is the Term insurance policy that pays all or a portion of the total premiums collected? What is the downfall of this option?co

Back 89

Return of Premium Policy; high premiums

Front 90

Contrary to instinct, Joint and Survivorship Policies are ______, not group policy.

Back 90

Individual

Front 91

What is the difference in Participating and Non-Participating Policies?

Back 91

Par: eligible to receive policy dividends

Non-Par: ineligible to receive policy dividends

Front 92

The insurance + the account value = ___?

Back 92

Basic Amount

Front 93

Option 1- Level death benefit

Death Benefit= _____

Back 93

Basic amount

Front 94

Option 2- Increasing Death Benefit

Death Benefit= _____+_____

Back 94

Basic Amount + Account Value

Front 95

UL Policies have a _________, a few charged when policy is surrendered.

Back 95

Surrender Charge

Front 96

The Term and UL Policies collect premiums or, Cash Value and Account Value that grow over time through investment, what are the 3 investment options used on each account?

Back 96

Fixed

Equity Indexed

Variable

Front 97

Where does an Insurer collect all incoming funds?

Back 97

General Account

Front 98

The General Account is __________ and invested _______.

Back 98

Highly regulated; conservatively

Front 99

What is the type of Life Insurance Investment where the investments are backed by and insurer’s General Account?

Back 99

Fixed Life