Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
62 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
Level Term |
-Death benefit is Level -Premium is level for the term |
|
|
|
Decreasing Term |
-Death benefit decreases -Premium remains level |
|
|
|
Increasing Term |
-Death benefit increases -Premium increases |
|
|
|
Return of premium term |
-Premium higher than regular term policy -Premium paid by insured is paid back if insured is alive at the end of the term |
|
|
|
Term features |
-renewable 💡 No new application required 💡 New premium based upon attained age |
|
|
|
Convertible |
-can be changed to permanent -no new application required |
|
|
|
Traditional Whole Life |
-Fixed premium -fixed & level death benefit -Cash values 💡 Guaranteed interest 💡 May be surrendered 💡 May be borrowed 💡 Endows at age 100 -death benefit 💡 Amount at risk to the company 💡 Plus cash values |
|
|
|
Types of whole life policies |
-continuous premium -limited payment -single premium (immediate cash values) -modified premium (lower premium first 3-5 years, then increases for 5-10 years before leveling) -Graded premium (initial premium lower than whole life and also increases for 5-10 years before leveling) -Indeterminate premium (adjusted by the company & guaranteed max premium) -Interest sensitive (has a current interest rate that's guaranteed) |
|
|
|
Flexible policies |
Adjustable life: -policyowner who adjusts the death benefit - increase requires proof of insurability and adjusts the premium -universal life - flexible premium - Cash account +cost of insurance & fees withdrawn monthly +current or guaranteed interest - option A-- level death benefit - option B--increasing death benefit -Equity indexed universal life - current interest on cash account +up or down based on stock market index +Account still guaranteed by company |
|
|
|
Variable policies |
-Life insurance plus investments -must have life insurance license & securities license -investments are in the separate account (securities) +Owner can lose money |
|
|
|
Types of Variable policies |
Variable Life: -death benefit can increase -has guaranteed death benefit Variable universal life: No guaranteed death benefit |
|
|
|
Specialized policies |
Joint life -first to die -second to die (survivorship) Juvenile -jumping juvenile (automatic increase on policy at age 18 or 21) |
|
|
|
Riders |
Add benefits to a life insurance policy |
|
|
|
Waiver of Premium |
-Insured and owner are the same person -Waives premium as long as the insured is disabled -Insured pays premium during the waiting period -company pays premiums after waiting period -Premiums paid during waiting period reimbursed -Insured pays premiums when disability ends |
|
|
|
Waiver of Cost of Insurance (Universal Life) |
-Cash account deductions waived -Waiting period & standard expiration |
|
|
|
Disability Income Rider |
-Pays monthly income while disabled -Benefit amount 1% of face amount |
|
|
|
Payor Rider |
-Pays premiums if the adult payor dies or gets disabled -Requires evidence of insurability (adult) |
|
|
|
Disability Riders |
-Waiver of Premium -Waiver of Cost of Insurance (Universal Life) -disability income rider -Payor rider |
|
|
|
Accelerated Benefits Rider |
-Advances part of the death benefit while insured is still alive - Death expected within 24 months - Permanent confinement in a nursing home due to a chronic illness or catastrophic injury -Reduces death benefit payable to beneficiary upon death of the insured -Disclosure by company of effect on death benefits and other benefits |
|
|
|
Other insured riders |
-spouse -children -family -exchange of insured (usually used when key employee retires) |
|
|
|
Insured term rider |
-added to a permanent policy -Premium lower than a sperate policy -limited time for rider -Expires at a certain age or number of years |
|
|
|
Return of Premium |
-increasing term insurance rider -Amount of rider equal to all premiums paid -Death must occur while rider is in force |
|
|
|
Accidental Death benefit |
-Death due to accident -Death must occur within 90 days of accident -Doubles or triples the face amount |
|
|
|
Accidental Death or dismemberment rider |
-the principal sum 100% of death benefit >paid if death due to accident >within 90 days of accident date -Pays benefit if dismemberment occurs >severe ce of feet, arms, legs, or hands >loss of sight or hearing >paralysis -Dismemberment is the capital sum - 50% of the principal sum -for multiple dismemberment claims maximum paid is principal sum |
|
|
|
Guaranteed insurability rider |
-Add life insurance up to a specified amount >certain ages- 25-40 >life events-marriage, birth, or adoption of a child >no medical questions asked >cost based on the insured's attained age |
|
|
|
Cost of living rider |
-Extra coverage to keep up with inflation -Premium based on attained age -Without proof of insurability |
|
|
|
Riders affecting amount of death benefit |
-Insured term rider -return of premium rider -accidental Death rider -accidental death or dismembered rider -guaranteed insurability rider -cost of living radar |
|
|
|
Long term care rider |
-Advance of the death benefits while insured is living -percentage of face amount each month -may pay for home care, assisted living, and nursing home care -Reduces death benefit payable upon death |
|
|
|
Interest income (only) |
-interest paid on the death benefit -death benefit paid at a later date |
|
|
|
Fixed period option |
Principal & interest paid over a period of time (larger payment if interest is greater than the guaranteed rate) |
|
|
|
Fixed Amount |
-A fixed amount is paid -Interest earnings will affect the payment period time frame (not the amount) |
|
|
|
Straight Life/Life only |
-Based on beneficiary'life expectancy -guaranteed for life -payments stop on death of beneficiary |
|
|
|
Period Certain |
-Life income to beneficiary -guaranteed for minimum amount of time (paid to another if they die early) |
Life income |
|
|
Refund |
-Pays beneficiary an income for life -Guarantees payments will at least equal the death benefit (pays someone else if they die early) |
Life income |
|
|
Joint & Survivor |
-Pays two beneficiaries an income for life (Survivor of the 2 gets the same or reduced payment) |
Life income |
|
|
Access to cash value while insured is living |
-policyowner makes decision -Loan reduces death benefit -insurer must notify policyowner -only universal (no interest or repayment but fees are involved) |
|
|
|
CARPPO (dividend options) |
Cash
Accumulation at interest (left with insurer to build interest)
Reduced Premium
Paid up additions (annual dividends used for additional life insurance)
Paid up insurance (dividends plus interest are applied to annual premiums)
One-year term insurance (dividend used to buy one-year term insurance equal to the policy's cash value)
Dividends are NOT guaranteed! |
|
|
|
Policyowner Non-forfeiture Options |
-surrender policy for cash -Reduced insurance - Premium based on age - less face value - immediate cash values -extended term - single premium term insurance - same face amount - Default option |
|
|
|
Free Look |
-Begins when the owner receives the policy -Usually no fewer than 10 days -Policy can be returned for a full refund |
|
|
|
Insuring Clause or Agreememt |
-Usually on first page of policy -insurers promise to pay upon death -Includes the face amount -signed by a company officer |
|
|
|
Ownership rights |
-change beneficiary -borrow cash values from policy -receive dividends -cancel -transfer ownership -change payment mode -Select a non forfeiture option |
|
|
|
Policy Assignment |
-Collateral (a pledge for a loan) -Absolute (permanent change) |
|
|
|
Entire Contract |
-Policy -Copy of application -Any riders or ammendments |
|
|
|
Endorsements (mod) |
-can only be made by the company -Owner can request a change |
|
|
|
Consideration-think Money! |
Both parties consider the policy |
|
|
|
Payment of Premium |
Payments due on advance of coverage date (or day of) |
|
|
|
Grace period |
-31 days that insurance is still in force if premium not paid |
|
|
|
Reinstatement |
-keeps the same premium -3 years to reinstate -must pay missed premiums + interest -must prove insurability |
|
|
|
Incontestability |
-no claims against the insured after a period of time -Usually after 2 years -Policy can't be taken away |
|
|
|
Suicide Clause |
>2 years = face amount <2 years = premium paid back |
|
|
|
Misstatements of age (gender) |
Death benefit adjusted up or down according to the correct age (incontestability doesn't apply.) |
|
|
|
Time Payment of Claims |
-ASAP -no longer than 60 days |
|
|
|
Who can be a beneficiary |
-individuals -classes -trusts -minors -estates -charities -schools |
7 |
|
|
Per Capita, Per Stripes (multiple beneficiaries in the same class) |
-Per Capita (by the head, not inheritable) -Per stripes (by branch, inheritable) |
|
|
|
Level beneficiaries |
-Primary -Secondary/contingent -Tertiary -Estate of insured |
|
|
|
Revocable vs. Irrevocable |
Revocable: Policyowner can change Irrevocable: Policyowner needs signature of beneficiary to change |
|
|
|
Beneficiary changes |
Policyowner can change the beneficiary but must notify the insurer |
|
|
|
Facility of payment provision. |
Insurer can pay someone other than the beneficiary |
|
|
|
Uniform Simultaneous Death Act |
If the insured and beneficiary die in the same accident the death benefit is paid to the secondary or the estate. |
|
|
|
Common Disaster Provision |
-Insured and beneficiary are in the same accident -if beneficiary survives 30-60 days after, they get the death benefit |
|
|
|
Spendthrift Provision |
Included in the policy. Spreads out the payment of the death benefit so it can't all be spent at once. |
|
|
|
Exculsions (exclusions) |
-Suicide -Aviation (not commercial) -war service |
|
