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10 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Define insurable interest
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a financial interest int he life of another person; a possibility of losing something of value if the insured should die. In life and health insurance, insurable interest must be stateda t the time of policy issue
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At what age can minors contract life insurance on their own lives, and the lives of their immediate family?
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15
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an arrangement that allows someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds when and where they are most needed before death
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Viatical settlement
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any financial transaction in which the owner of a life insurance policy sells a policy that is no longer needed to a third party for some fomr of compensation, usually cash
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life settlement
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This is the calculation of the probable future earnings of the insured using wages, inflation, the number of years to retirement, and the time value of money
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Human Life Value Approach
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To calculate an individual's life value, the agent must do the following...
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Determine the insured's after-tax income fromt he present date until retirement
Deduct the insured's annual expenses for food, clothing, mediacal and other expenses Calculate the number of years to retirement Estimate the effect inflation would have on income over the required number of years |
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Which of the following is NOT true of life settlements? (H)
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b) the seller must be terminally ill
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a)they involve insurance policies with large face amounts
b)the seller must be terminally ill c)they could be used for a key person coverage d)they could be sold for an amount greater than the current cash value |
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Under what purchase plan does each partner agree to sell his or her business interest to the surviving partners, and each surviving partner agrees to buy the interest of the deceased partners?
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Cross Purchase Plan
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What is the term used when a person sells his assets as a way to gain money?
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Liquidation
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Which of the following statments concerning buy-sell agreements is true?
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A) Buy-sell agreements are normally funded with a life insurance policy
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a)buy-sell agreements are normally funded with a life insurance policy
b)premiums paid are deductible as a business expense c)benefits received are considered income taxable d)buy-sell agreements pay in the event of a medical emergency |
