General info Flashcards
(25 cards)
What is the primary purpose of a life insurance policy?
Think of life insurance as a safety net that catches your loved ones when life throws them a curveball.
What are the two main types of life insurance?
Remember: Whole life is like a tree that grows over time, while term life is a temporary umbrella for rainy days.
True or False: A beneficiary is the person who pays the insurance premiums.
False! The beneficiary is the one who receives the payout, not the one who pays.
What does ‘underwriting’ refer to in life insurance?
Underwriting is like a bouncer at a club, deciding who gets in based on risk factors.
Fill in the blank: The _____ is the amount paid by the insurer upon the insured’s death.
death benefit
What is the difference between a revocable and irrevocable beneficiary?
Revocable is like a flexible friend you can change, while irrevocable is a lifelong commitment.
What is a premium in the context of life insurance?
Think of a premium as the ticket price for the insurance ride, paid regularly to keep it going.
True or False: A life insurance policy can only be taken out on one’s own life.
False! You can take out a policy on someone else’s life with their consent.
What is an insurance rider?
Imagine a rider as an accessory that enhances your insurance policy, adding extra benefits.
What is the term for the period during which a policyholder can pay overdue premiums without losing coverage?
grace period; think of it as a second chance to keep the party going.
What does ‘cash value’ mean in whole life insurance?
Cash value is like a piggy bank that grows over time and can be borrowed against.
What is the purpose of a policy loan?
A policy loan is like borrowing from your future self; you pay it back with interest from your cash value.
Fill in the blank: The _____ is the legal document that outlines the terms of the insurance contract.
policy
What is a contestability period?
It’s a two-year window where the insurer can investigate claims more closely, like a detective on a case.
True or False: Life insurance proceeds are generally subject to income tax.
False! Life insurance payouts are typically tax-free for beneficiaries.
What does ‘insurable interest’ mean?
Insurable interest means you must have a valid reason to insure someone, like a family tie or financial stake.
What is the role of the North Carolina Department of Insurance?
Think of it as the watchdog, ensuring that insurance companies play fair and protect consumers.
What is a term policy?
A term policy is like a temporary hotel stay; you get coverage for a specific period.
What is a whole life policy?
Whole life is like a lifelong friend; it covers you for your entire life and builds cash value.
Fill in the blank: The _____ clause prevents the insurer from denying a claim after a certain period.
incontestability
What is ‘premium financing’?
Premium financing is like taking out a loan to pay for your insurance premiums; a financial shortcut.
What is the significance of the ‘free look’ period?
The free look period is your trial run; you can review and cancel your policy without penalty.
What does ‘beneficiary designation’ mean?
Beneficiary designation is like naming the MVP of your insurance policy; they get the payout.
True or False: Life insurance can be used as a financial planning tool.
True! It can help with estate planning and wealth transfer.
