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69 Cards in this Set
- Front
- Back
-Non-forfeiture
-Dividen -Settlement |
3 LIFE INSURANCE OPTIONS
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-Cash Surrender Value
-Paid-up Insurance -Extended Term Insurance |
NON-FORFEITURE OPTIONS
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-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
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-Refund if policy is cancelled prior to mature
-Take the money and run |
CASH SURRENDER VALUE (NF)
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-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.
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PAID-UP INSURANCE (NF)
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-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)
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1.)CASH
2.)REDUCED PREMIUMS 3.)PAID-UP ADDITIONS 4.)ONE-YEAR TERM 5.)ACCUMULATION AT INTEREST |
5 DIVIDEND OPTIONS
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A payment made to the policy owner when the PP company makes a profit at the end of the year.
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DIVIDEND
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Company that issues dividens
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PARTICIPATING POLICY
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-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
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-simply taking the money from the dividend and blowing it.
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CASH (DVO)
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-simply taking the dividend amount and applying it to reduce your premium
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REDUCE PREMIUM (DVO)
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-the dividend is used as a SINGLE PREMIUM to purchase more insurance of the same kind, increasing the face amount substantially over time.
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PAID-UP ADDITIONS (DVO)
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-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)
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-The insured lets the IC keep the dividen and invest it.
-Interest earned is taxable |
ACCUMULATION AT INTEREST
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-Interest Only
-Life Income -Joint & Survivor -Fixed Period Installments -Fixed Amount Installments -Life With Term Certain -Misc. |
LIFE INS SETTLEMENT OPTIONS
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-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)
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-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)
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-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)
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-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)
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-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)
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-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)
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-Some settlement options can be tailor-made.
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MISC. SETTLEMENT OPTIONS
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-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
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-Beneficiary recieves one lump sum
-Insured's SPOUSE is the beneficiary |
PAYMENTS NOT TAXED
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-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
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-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
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-Must appear at the bottom left of the first page
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BRIEF & CORRECT DESCRIPTION OF BENEFITS & FORM NUMBER
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-defines the intent of the contract. (Ex.) Life policy states death = payment of X dollars
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INSURING CLAUSE
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-states when the intent of the contract will take place
-IC has 30 days to fork it over |
SETTLEMENT CLAUSE
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-The anniversary date of a policy
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POLICY YEAR CLAUSE
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-List of Dividen options
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PARTICIPATING POLICY CLAUSE
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-States that the AGENT can NOT make any changes to the policy
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MODIFICATION CLAUSE
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-Policy + application
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ENTIRE CONTRACT
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-States that the IC can't use any statements on the app to avoid paying any claims
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CONTRACT BY THE ENTIRETY
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-States that an IC must prove that the insured DELIBERATELY concealed material facts in order to deny a claim
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REPRESENTATIONS (not warranties)
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-IC has 2 years to find use of any fraudulant info by the insured. After 2 years, insured is good to go.
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INCONTESTABILITY
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-Payments to the beneficiary are adjusted according to correct age.
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MISSTATEMENT OF AGE
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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
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-When the Owner's Rights are transferred to someone else.
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ASSIGNMENT
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-ABSOLUT
-COLLATERAL |
2 TYPES OF ASSIGNMENT
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-Owner transfers all of their rights
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ABSOLUT ASSIGNMENT
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-Owner retains some of their rights and transfers the rest.
-Usually used when the insured wants to borrow $$ |
COLLATERAL ASSIGNMENT
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-Allows the insured to make a change or switch policies at any time
*If insured switches to LOWER PREMIUM Insurability is required |
POLICY CHANGE
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-People who most likely forsee a loss will buy insurance
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ADVERSE SELECTION
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-States amount of the premium, where and when it should be paid.
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PREMIUM PAYMENT
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-Gives the insured extra time to pay the premium.
-31 days by law -Covered for those 31 days |
GRACE PERIOD
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-Premium payments are made directly from the CV
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AUTOMATIC PREMIUM LOAN
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-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
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-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
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-Insured has 10 days to look things over before the deal is sealed.
-Entitled to a full refund |
10-DAY FREE LOOK
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-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
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-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
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-A SEPERATE sheet of paper that includes CHANGES to the policy
-Has ABSOLUTE rule over policy uncertainties |
RIDERS
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-Type of rider that pays an additional amount if the insured's death is ACCIDENTAL
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ACCIDENTAL DEATH BENEFIT (ADB)
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-Type of rider where the insured is able to buy more life insurance of the same kind WITHOUT proving insurability
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GUARANTEED INSURABILITY
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-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
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-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
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-A type of rider that increases it's death benefits to keep up with inflation (according to CPI)
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COST OF LIVING
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-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
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-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.
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SPOUSE/OTHER INSURED TERM RIDER
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-A type of rider that consists of an increasing term where the pay the amount of the total premiums paid up to death.
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RETURN OF PREMIUM
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-A type of rider that covers accident and health
-Must be approved by Director |
ACCIDENT & HEALTH RIDER
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-A type of rider that includes LIVING BENEFITS.
-Insured collects a % of FV -Amt. collected gets reduced from FV |
ACCELERATED DEATH BENEFIT
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-Literature that helps the purchaser of Life Insurance decide how much and what kind he/she should buy.
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BUYER'S GUIDE
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-A consumer's description of the consumer's overall look at a policy
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POLICY SUMMARY
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-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
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-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
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COMPARATIVE INFORMATION FORM
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-Attempts made by an existing IC when they find that their policy might be replaced by super-agent Ben Decker
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CONSERVATION
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