Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/69

Click to flip

69 Cards in this Set

  • Front
  • Back
-Non-forfeiture
-Dividen
-Settlement
3 LIFE INSURANCE OPTIONS
-Cash Surrender Value
-Paid-up Insurance
-Extended Term Insurance
NON-FORFEITURE OPTIONS
-LI builds cash value. If premium payments stop, cash value can still exist, the formally insured doesn't give it up.
-Only included in whole and in term 20 years or longer
DEFINITION OF NON-FORFEITURE OPTIONS
-Refund if policy is cancelled prior to mature
-Take the money and run
CASH SURRENDER VALUE (NF)
-Premium payments stop, and cash value is used as a SINGLE PREMIUM to purchase new WHOLE ins. with a lower face amount for as much as the CV will buy.
PAID-UP INSURANCE (NF)
-Premium payments stop, and cash value is used to purchase new TERM ins. with the SAME face amount.
-Used as a default when premium payments stop.
EXTENDED TERM (NF)
1.)CASH
2.)REDUCED PREMIUMS
3.)PAID-UP ADDITIONS
4.)ONE-YEAR TERM
5.)ACCUMULATION AT INTEREST
5 DIVIDEND OPTIONS
A payment made to the policy owner when the PP company makes a profit at the end of the year.
DIVIDEND
Company that issues dividens
PARTICIPATING POLICY
-not TAXABLE
-calculated @ end of the year
-dispursed on individual policy anniversary dates, then the insured decides what to do with the extra cash!
DIVEDEND II
-simply taking the money from the dividend and blowing it.
CASH (DVO)
-simply taking the dividend amount and applying it to reduce your premium
REDUCE PREMIUM (DVO)
-the dividend is used as a SINGLE PREMIUM to purchase more insurance of the same kind, increasing the face amount substantially over time.
PAID-UP ADDITIONS (DVO)
-This DV is used when a policy holder has taken a loan out on their CV and has NOT paid it back.
-The insured takes the DIVIDEND and uses it to buy a ONE YEAR TERM equal to the remaining CV to beef up the deat benefits to the beneficiary.
-Risk to the IC, so insurability is required
ONE-YEAR TERM (DVO)
-The insured lets the IC keep the dividen and invest it.
-Interest earned is taxable
ACCUMULATION AT INTEREST
-Interest Only
-Life Income
-Joint & Survivor
-Fixed Period Installments
-Fixed Amount Installments
-Life With Term Certain
-Misc.
LIFE INS SETTLEMENT OPTIONS
-A settlement option where the IC keeps the face amount and invests it. The beneficiary then receives payments on the interest
-Interest is taxable
-Option used only when large face amount
INTEREST ONLY (SO)
-A settlement option where the beneficiary gets installed payments for life.
-Payment amounts are determined by the age of the beneficiary
-Payments consist of both principle and interest where the interest is taxable
-If beneficiary dies before receiving all possible payments, the left-over amount goes back to the IC to pay claims on people who lived longer than expected
LIFE INCOME (SO)
-A settlement option written on two or more people.
-Benefits received when first of the group dies.
-Benefits cease when last one dies
-Common option for married couples.
-Payment amount depends on #of beneficiaries and age.
JOINT & SURVIVOR (SO)
-A settlement option where payments are made to the beneficiary over a certain period of time.
-Length of period determines amount.
-Payments are guaranteed. If beneficiary dies, payments will go to contingent ben.
-Payments consist of principle & interest(taxable)
FIXED PERIOD INSTALLMENTS (SO)
-A settlement option where the insured chooses an exact amount of each payment to the beneficiary.
-Payments are made until face amount is exhausted.
-Amount of payment determines how long they will go on.
FIXED AMOUNT INSTALLMENTS (SO)
-A settlement option so that the INSURED can collect from his or her policy
-Payments are made form the CV, not the face amount
-Payments are fixed amount and period
-If insured dies: the beneficiary then gets the $$.
-If insured lives: he/she continues to get payments for life.
LIFE WITH TERM CERTAIN (SO)
-Some settlement options can be tailor-made.
MISC. SETTLEMENT OPTIONS
-Prevents the beneficiary, who probably isn't that good with money, from getting their hands on the total amount and blowing it.
-Also keeps the beneficiary's creditors, if they have any, from accessing the money.
SPENDTHRIFT CLAUSE
-Beneficiary recieves one lump sum
-Insured's SPOUSE is the beneficiary
PAYMENTS NOT TAXED
-Beneficiary's interest on installment payments
-Insured who cashes in on policy, or policy matures = EQUITY.
-Paid to the insured's estate (must exceed 1million)
PAYMENTS TAXED
-Beneficiary buys policy from insured (must be done within 3years of the insured's death)
-GIFTING: insured gives up all rights of policy and gives it to the beneficiary
AVOIDING TAXATION
-Must appear at the bottom left of the first page
BRIEF & CORRECT DESCRIPTION OF BENEFITS & FORM NUMBER
-defines the intent of the contract. (Ex.) Life policy states death = payment of X dollars
INSURING CLAUSE
-states when the intent of the contract will take place
-IC has 30 days to fork it over
SETTLEMENT CLAUSE
-The anniversary date of a policy
POLICY YEAR CLAUSE
-List of Dividen options
PARTICIPATING POLICY CLAUSE
-States that the AGENT can NOT make any changes to the policy
MODIFICATION CLAUSE
-Policy + application
ENTIRE CONTRACT
-States that the IC can't use any statements on the app to avoid paying any claims
CONTRACT BY THE ENTIRETY
-States that an IC must prove that the insured DELIBERATELY concealed material facts in order to deny a claim
REPRESENTATIONS (not warranties)
-IC has 2 years to find use of any fraudulant info by the insured. After 2 years, insured is good to go.
INCONTESTABILITY
-Payments to the beneficiary are adjusted according to correct age.
MISSTATEMENT OF AGE
The insured can...
-Name the beneficiary
-Select premium mode
-Choose settlement options
-Cash in or borrow on policy
-Choose dividend options
-Assign policy
OWNER'S RIGHTS
-When the Owner's Rights are transferred to someone else.
ASSIGNMENT
-ABSOLUT
-COLLATERAL
2 TYPES OF ASSIGNMENT
-Owner transfers all of their rights
ABSOLUT ASSIGNMENT
-Owner retains some of their rights and transfers the rest.
-Usually used when the insured wants to borrow $$
COLLATERAL ASSIGNMENT
-Allows the insured to make a change or switch policies at any time
*If insured switches to LOWER PREMIUM Insurability is required
POLICY CHANGE
-People who most likely forsee a loss will buy insurance
ADVERSE SELECTION
-States amount of the premium, where and when it should be paid.
PREMIUM PAYMENT
-Gives the insured extra time to pay the premium.
-31 days by law
-Covered for those 31 days
GRACE PERIOD
-Premium payments are made directly from the CV
AUTOMATIC PREMIUM LOAN
-When insured doesnt' pay premiums and makes use of the automatic premium loan, they have 3 years to get back on track and start paying premiums.
-Must payback all premiums + interest
-Must improve insurability
REINSTATEMENT
-The insured borrows money on their life insurance policy.
-IC must loan the $$
-Policy has to be in force for at least 3 years
-IC charges interest b/c they now can't invest the $.
-IC can demand payment of current year premiums
-IC's max amt. = current CV.
-IC can wait up to 6 mths.
-Non-repayment = FV deduction
-IC can't void policy until amount owed > CV
-IC must notify insured if possibility of voiding policy
POLICY LOANS
-Insured has 10 days to look things over before the deal is sealed.
-Entitled to a full refund
10-DAY FREE LOOK
-Insured gets 31 days to look thins over before the deal is sealed
-ONLY for policies that are sold by DIRECT MARKETERS
31-DAY FREE LOOK
-Exclusions on a life policy
WAR
AVIATION:except for fare paying passengers
SUICIDE:loser must wait 2 years befor killing themselves.
HAZARDOUS OCCUPATIONS/SPORTS:
W.A.S.H
-A SEPERATE sheet of paper that includes CHANGES to the policy
-Has ABSOLUTE rule over policy uncertainties
RIDERS
-Type of rider that pays an additional amount if the insured's death is ACCIDENTAL
ACCIDENTAL DEATH BENEFIT (ADB)
-Type of rider where the insured is able to buy more life insurance of the same kind WITHOUT proving insurability
GUARANTEED INSURABILITY
-Type of rider that allows the waiver of premium payments if the insured becomes totally disabled
-Must pay for 6 mths, if disability continues, 6 mths is refunded as well as premium payments waivered
WAIVER OF PREMIUM
-A type of rider that is similar to the WAIVER OF PREMIUM, but includes additional income to cover wage loss.
-Depends on FV of policy ("X" dollars per $1,000 of FV)
WAIVER OF PREMIUM + DISABILITY
-A type of rider that increases it's death benefits to keep up with inflation (according to CPI)
COST OF LIVING
-A rider a parent puts on to cover their current and future children.
-$1,000 to $10,000 FV
-Ends when child = 23 or parent = 65
-Child can convert coverage to their own Whole policy (cant'exceed 5x FV)
CHILDREN'S TERM RIDER
-A type of rider that pays the primary insured if the secondary insured dies within the term, but if the primary insured dies within the term, the secondary insured receives a paid-up policy.
SPOUSE/OTHER INSURED TERM RIDER
-A type of rider that consists of an increasing term where the pay the amount of the total premiums paid up to death.
RETURN OF PREMIUM
-A type of rider that covers accident and health
-Must be approved by Director
ACCIDENT & HEALTH RIDER
-A type of rider that includes LIVING BENEFITS.
-Insured collects a % of FV
-Amt. collected gets reduced from FV
ACCELERATED DEATH BENEFIT
-Literature that helps the purchaser of Life Insurance decide how much and what kind he/she should buy.
BUYER'S GUIDE
-A consumer's description of the consumer's overall look at a policy
POLICY SUMMARY
-When a new policy is bought to replace one that already exists
-Applicant must receive a NOTICE OF REGARDING REPLACEMENT.
-Agent must receive a list of all existing life policies / annuities
-Must send the existing insurers a COMPARITIVE INFORMATION FORM.
REPLACEMENT
-A way of telling an existing IC that you could quite possibly take their business by issuing a policy to one of their unhappy customers
COMPARATIVE INFORMATION FORM
-Attempts made by an existing IC when they find that their policy might be replaced by super-agent Ben Decker
CONSERVATION