Ch 2 flashcards
(16 cards)
Which of the following life insurance policies allows a policyowner to take out a loan from the policy’s cash value?
Variable Universal life
What is a decreasing term life policy?
Decreasing term policies feature
-a level premium
-death benefit that decreases each year over the duration of the policy term
-usually used when the amount of needed protection is time sensitive, or decreases over time.
-most commonly purchased to ensure the payment of a MORTGAGE or OTHER DEBTS if the insured dies prematurely
-Convertible, but not renewable
What is a Variable Universal Life policy?
a policy is a type of permanent life insurance that COMBINES the protection of a traditional life insurance policy with an investment component.
It allows policyholders to ALLOCATE A PORTION OF THEIR PREMIUMS to various INVESTMENT SUBACCOUNTS, similar to mutual funds, with the potential for growth, but also carries market risk
What is a credit term life policy?
a type of life insurance designed to PAY OFF A SPECIFIC DEBT, like a mortgage or car loan, if the borrower dies before the debt is fully paid. Unlike traditional life insurance, the PAYOUT GOES DIRECTLY TO THE LENDER, not the beneficiaries, ensuring the debt is cleared.
What is an increasing term life policy?
-level premiums
-death benefit that increases each year over the duration of the policy term
-increase is a specific amount or percentage of the original amount
-used by insurance companies to fund certain riders that provide a REFUND OF PREMIUMS or gradual increase in total coverage, such as cost of living
-can be added to other policies as a rider
What is Universal Life Insurance?
Policy owner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policy owner may even skip paging a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for nonpayment of premium
What is a survivorship policy?
also known as SECOND TO DIE LIFE INSURANCE, is a joint life insurance policy that pays out a death benefit only after both insured individuals have passed away. Unlike traditional life insurance which pays out upon the first death, survivorship policies provide a lump sum to beneficiaries after the death of the second insured
Which Universal life allows the beneficiary to collect both the benefit and cash value upon the death of the insured?
Option B
What is the difference between a death benefit and a cash value?
What life insurance polcies use cash value?
The death benefit is the amount paid to beneficiaries upon the policyholder’s death, while the cash value is a savings component that grows over time and can be accessed during the policyholder’s lifetime
Cash value is a feature of permanent life insurance policies like WHOLE LIFE and UNIVERSAL LIFE
To sell variable life insurance policies, an agent must receive all of the following except:
FINRA (Financial Industry Regulatory Authority) Registration
Life insurance License
SEC registration (Securities and Exchange Commission)
A securities license
Agents selling variable life products MUST be registered with FINRA adn have a securities license, and must be licensed within the state to sell insurance.
SEC is for securities, not agents.
The death protection component of Universal Life Insurance is always
Annually Renewable Term
Decreasing Term
Whole Life
Adjustable Life
Anually Renewable Term
Do term policies develop cash values?
No
What are the two types of interest rates called in a Universal Life insurance Policy?
Guarenteed and Current
What is an annuity?
An annuity is a contract with an insurance company that provides a guaranteed income stream, typically used for retirement planning. You make a lump sum or series of payments (premiums), and in return, you receive regular payments, either for a fixed period or for life
What is a market index?
A market index life insurance, specifically Indexed Universal Life (IUL) insurance, is a permanent life insurance policy where the cash value component’s interest rate is tied to the performance of a stock market index like the S&P 500. Instead of a fixed interest rate, the cash value earns interest based on the index’s performance, offering potential for higher growth but also carrying some investment risk. IUL policies typically include a guaranteed minimum interest rate (the “floor”) and a maximum interest rate (the “cap”).
