Oregon Life & Health Insurance Exam

Front 1

Stock company

Back 1

an insurer formed through the sale of stock; owned by the stockholders and run by a board of directors elected by the stockholders. Par and non par.

Front 2

Mutual companies

Back 2

incorporated insurers w/o capital stock; no stockholders & owned by policyholders and/or members. Always par-policies.

Front 3

Fraternal benefit society

Back 3

a not-for-profit incorporated society/order or supreme lodge without capital stock.

Front 4

A Lloyd’s association

Back 4

not an insurance company but a voluntary association (syndicate) of individuals or groups of individuals who agree to insure a particular risk.

Front 5

Stop-loss insurance

Back 5

covers losses in excess of a specified amount.

Front 6

Domestic insurer

Back 6

an insurer doing business in the state in which it was formed.

Front 7

Foreign insurer

Back 7

an insurer doing business in any state in the U.S. or its territories other than the one in which it was formed.

Front 8

Alien insurer

Back 8

an insurer formed under laws of any country other than the U.S.

Front 9

Admitted insurer

Back 9

an insurer authorized by a certificate of authority issued to it by the Insurance Commissioner to transact insurance in the state.

Front 10

Implied

Back 10

not stated-but assumed by the producer to be part of his standard duties.

Front 11

Apparent

Back 11

authority the public believes the producer has based on his actions; example: if he lets an insured pay premiums late, the insured would assume the producer is authorized to allow this.

Front 12

Doctrine of reasonable expectations

Back 12

under this the policy is considered to cover all areas a person would reasonably expect such a policy to cover and a court will not assume a person has read or understands any policy language which may provide technical loopholes in coverage.

Front 13

Death benefit

Back 13

creates an immediate estate; upon the death of the insured an endowment payable to the beneficiaries upon the insured’s death. It could also be called the policy “face amount.”

Front 14

Living benefits

Back 14

consist of payments that may be made to the owner of the life insurance policy while the insured is still living. Either as an endowment, cash value, policy dividends and/or disability benefits.

Front 15

Insurable interest

Back 15

involves a financial or emotional loss that would result from the death of the insured; insurable interest had to exist only at the time of policy purchase.

Front 16

Group life insurance

Back 16

a contract issued to an employer/union/professional/association/fraternal association and or other eligible group providing insurance (usually term) on the group members.

Front 17

Policy premiums are based on three factors:

Back 17

1. Mortality (anticipated death claims)
2. Loading (insurance company operating expenses)
3. Interest credited for use of the premium.

Front 18

Product has a guaranteed face amount and guaranteed cash values that do not fluctuate over the term of the policy/money from premiums is invested. The insurer bears the investment risk. What type of policy is this?

Back 18

Fixed life

Front 19

Product has benefits (face amount and cash value) that will vary over the term of the policy based on the performance of investments made with the policyowner’s cash value. The insurer guarantees a minimum policy face amount and will invest the policy cash value. Insured bears the risk. What type of policy is this?

Back 19

Variable life

Front 20

Permanent insurance

Back 20

provides for payment of the full face amount of the policy at the end of the policy term (at maturity) or at the end of the insured’s lifetime.

Front 21

The amount promised to be paid at the maturity of the policy is called an ____________.

Back 21

endowment.

Front 22

Term insurance

Back 22

provides for payment of the face amount of the policy only if the insured dies within a certain term or period of time.

Front 23

______ promises to pay the policy death benefit (or face amount) upon the death of the insured regardless of when it occurs or an amount equal to the face amount at age 100 if he is still living.

Back 23

Whole life

Front 24

Straight life

Back 24

the amount of coverage remains straight or level for the insured’s lifetime or to age 100.

Front 25

Level premium whole life

Back 25

the amount of each premium payment remains the same for the insured’s lifetime or to age 100.

Front 26

Continuous premium whole life

Back 26

the premiums are paid continuously for the insured’s lifetime or to age 100.

Front 27

The face amount consists of two parts:

Back 27

1. Pure insurance
2. Cash value

Front 28

Limited pay life policy

Back 28

a whole life insurance policy for which premiums are paid for a limited period of time.

Front 29

The policyowner is allowed to increase/decrease policy term and change it from whole life to term/decrease or increase face amount and increase/decrease premium payments. What type of policy is this?

Back 29

Adjustable life

Front 30

Term insurance

Back 30

Considered pure insurance as death benefit is only paid if insured dies during the term & is temporary insurance as it provides protection for only a specified term.

Front 31

What are the three basic types of term insurance?

Back 31

1. Level term
2. Decreasing term
3. Increasing term

Front 32

Level term policy

Back 32

Has a face amount (death benefit) that remains level during the entire policy term. The premium for the policy could be a single premium or a level premium.

Front 33

Renewable

Back 33

The policyowner is able to renew the policy each time it expires if he wishes to do so without evidence of insurability

Front 34

Universal life insurance

Back 34

The policyowner pays a target or recommended premium amount. Premium payments can be increased, decreased or even skipped as long as there is enough cash value to cover the premium.

Front 35

The death benefit in _______ is the policy face amount just like it is in a whole life policy. It equals the total of the cash value plus the insurance protection or “amount at risk".

Back 35

Option A

Front 36

The death benefit in _______ equals the policy face amount plus the cash value

Back 36

Option B

Front 37

Annuitant

Back 37

The person designated in an annuity contract to receive annuity payments, either for life or for a certain period.

Front 38

Cash refund annuity

Back 38

a refund annuity promises to pay income for the life of the annuitant and guarantees to pay at least an amount to refund the premiums paid for the annuity. A cash refund annuity provides
the annuitant’s beneficiary will be paid the difference between the premiums paid to the insurer and the payments received by the annuitant prior to death in cash in a lump sum.

Front 39

Deferred Annuity

Back 39

an annuity which provides that annuity payments will be deferred (not paid out) for a specified period or until the annuitant reaches a specified age. May be purchased on a single premium/installment
premium basis/or flexible premium.

Front 40

Equity Index Annuity (EIA)

Back 40

a fixed annuity with a guaranteed minimum interest rate and a current interest rate.

Front 41

Fixed Annuity

Back 41

an annuity that provides for income payments of a guaranteed amount (with principal and interest guaranteed) during the annuity period.

Front 42

Flexible Premium Annuity

Back 42

a deferred annuity paid for over a period of time with flexible premiums
(premiums need not be paid at a specific time or in a specific amount). Benefits cannot be determined until after the final premium payment is made.

Front 43

Immediate Annuity

Back 43

an annuity which provides for the first payment to the annuitant immediately (which means at the end of the one annuity payment interval) e.g. if annuity payments are monthly, the first payment is in one month.

Front 44

Installment Refund Annuity

Back 44

a refund annuity promises to pay income for the life of the annuitant and guarantees to pay at least an amount to refund the premiums paid for the annuity. An installment refund annuity provides the annuitant’s beneficiary will be paid the difference between the premiums paid to the insurer and the
payments received by the annuitant prior to death in installment payments of the same amount paid to the annuitant until paid out.

Front 45

Joint Life Annuity

Back 45

an annuity payable to two or more persons until one dies.

Front 46

Joint & Survivor Annuity

Back 46

an annuity payable to two or more annuitants until the last surviving
annuitant has died.

Front 47

Level Premium Annuity

Back 47

a deferred annuity paid for over a period of time with fixed premiums (premiums of a specific amount that must be paid at specific times).

Front 48

Life with Period Certain Annuity

Back 48

an annuity payable for the longer of a certain period or the annuitant’s life.

Front 49

Straight Life Annuity

Back 49

an annuity payable for the life of the annuitant without any guarantee as to a minimum amount or payment period.

Front 50

Variable Annuity

Back 50

an annuity which has annuity payments which will vary in amount based on the value of a separate account which has been used to make investments.

Front 51

Common Disaster Clause (SURVIVORSHIP CLAUSE)

Back 51

provides that the beneficiary is entitled to policy proceeds only if he outlives the insured for a certain period. If the beneficiary dies within this period the proceeds are paid to the contingent beneficiary or the insured’s estate.

Front 52

Fair Credit Reporting Act

Back 52

a federal law designed to protect the privacy of consumer report information and guarantee that information supplied by credit reporting agencies is as accurate as possible. Gives the consumer certain rights such as correcting incorrect information on a consumer report.

Front 53

Free Look Period

Back 53

a provision required by law which allows a policyowner to return a policy within 10 (or 20 days for a replacement policy) after delivery and receive a full premium refund.

Front 54

IRA

Back 54

personal qualified retirement account or annuity through which an individual may accumulate tax deferred dollars each year and is not taxed on those dollars or the income they earn until withdrawn at retirement.

Front 55

Excess Contribution Penalty

Back 55

all IRA contributions in excess of IRA limits are subject to a penalty of 6% if not withdrawn by the tax-filing deadline each year.

Front 56

Premature Withdrawals

Back 56

withdrawal of the portion of an IRA attributable to deductible contributions and earnings prior to age 59 ½; results in a 10% penalty.

Front 57

Required Minimum Distributions

Back 57

IRA distributions must start before April 1 of the year after age 70½ and meet minimum distribution requirements. If they do not there is a penalty of 50% of the amount that should have been withdrawn.

Front 58

Roth IRA

Back 58

an IRA funded with after-tax dollars so all earnings in the account are nontaxable. When funds are withdrawn after age 59 ½, none of the withdrawal is taxable if the account has been open for at least five years.

Front 59

Spousal IRA

Back 59

a separate IRA for a nonworking spouse with NO earned income during a given tax year.

Front 60

KEOGH (HR-10)

Back 60

plan under which a self-employed individual establishes a formal retirement plan to obtain tax advantages (contributions deductible from the taxable income and plan earnings are not subject to income tax until
retirement).

Front 61

Nonforfeiture Options

Back 61

since an insurer cannot declare cash value forfeited when a policy lapses the policyowner has nonforfeiture options for the use of this cash value. These are (1) cash surrender (2) extended term insurance and (3) reduced paid-up insurance.

Front 62

EXTENDED TERM INSURANCE

Back 62

this is the option automatically applied if no other selection is made. It provides for the cash value (less any loan) to be used as a net single premium to buy term insurance with the same face amount as the original policy (less any policy loan). The amount of the cash value determines the how long the term is extended.

Front 63

REDUCED PAID-UP INSURANCE

Back 63

this nonforfeiture option provides for the same type of insurance (e.g. whole life if the original policy was whole life) but at a reduced face amount. The face amount is based on what the net cash value may purchase with a single premium.

Front 64

TAX-SHELTERED (DEFERRED) ANNUITY (403B)

Back 64

tax-deferred retirement plan available to employees of institutions who qualify for filing as nonprofit tax status under IRS Section 501(c) (3). This includes organizations operated exclusively for religious/charitable/scientific/literary/or educational purposes and public school teachers.

Front 65

An annuity based on the life of one annuitant and whose payments cease upon the death of this annuitant is what kind of annuity?

Back 65

individual life annuity

Front 66

An annuity based on the life of two or more annuitants and whose payments cease upon the death of one of these annuitants is what kind of annuity?

Back 66

joint life annuity

Front 67

An annuity based on the life of two or more annuitants and whose payments continue until last surviving annuitant dies is what kind of annuity?

Back 67

joint and survivorship annuity

Front 68

totally and permanently disabled

Back 68

disability is total if it requires a doctor’s care and prevents the insured from engaging in either his own occupation or in any occupation depending on the policy definition. A disability is permanent if it lasts beyond a specified waiting period (generally three to six months). If the disability does last beyond the waiting period premiums paid during the waiting period are refunded.

Front 69

Per capita

Back 69

any deceased beneficiary’s share is paid to the surviving beneficiaries.

Front 70

Per stirpes

Back 70

any deceased beneficiary’s share will pass through the deceased beneficiary (the root) to his heirs.

Front 71

This clause is intended to protect the beneficiary by preventing the beneficiary from losing the proceeds to creditors and by preventing creditors from including the proceeds in legal actions against the beneficiary. What clause is this?

Back 71

spendthrift clause

Front 72

joint life settlement option

Back 72

pays income to more than one beneficiary until one dies.

Front 73

joint and survivor life income option

Back 73

will pay income to two or more beneficiaries until the last surviving beneficiary dies.

Front 74

guideline premium and cash value corridor test

Back 74

requires that:
(1) the total premiums paid do not exceed certain levels and that
(2) the cash value in the account not exceed certain percentages of the face amount at various times.

Front 75

Policy dividends

Back 75

are considered a return of excess premiums and are therefore not taxable.

Front 76

If a life insurance contract fails to meet a “7-pay test” it is called a ______.

Back 76

modified endowment contract (MEC)

Front 77

In a ______ plan the employer does not give the employee the funds until an agreed-upon time. Until then, the funds promised to the employee may be placed in a company reserve account.

Back 77

Deferred compensation

Front 78

Employer contributions are tax deductible by the employer & not considered taxable income to the employee until he withdraws funds from the plan.

Back 78

Tax-qualified plan

Front 79

A ______ is a plan only available to employees of public school systems and nonprofit tax-exempt charitable educational or religious organizations.

Back 79

Tax-sheltered annuity (TSA)

Front 80

A ______ is a plan established by an employer to enable employees or their beneficiaries to share in company profits. The company’s contributions to the plan may vary based on its financial condition and may be made from other than profits. Contributions may be either in addition to salary or in the form of a salary reduction.

Back 80

401(k)

Front 81

An ______ is a qualified benefit plan in which an employee gets shares of company stock and consequently part ownership in the company where they work.

Back 81

Employee Stock Ownership Plan (ESOP)

Front 82

The ______ is a qualified retirement plan available for self-employed persons/such as sole proprietors/partners in a business/or professionals and their employees.

Back 82

Keogh Plan

Front 83

The ______ offers Federal employees and members of the military the same type of savings and tax benefits that many private companies offer under 401(k) plans.

Back 83

Thrift Savings Plan (TSP)

Front 84

Step-rate premium

Back 84

As the premium increases with each renewal to reflect the insured’s current age at the time of renewal.