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ADVANCED ADVOCIS CURRICULUM PROGRAM > INSURANCE (PG. 625-682) > Flashcards

INSURANCE (PG. 625-682) Flashcards

1
Q

CRITICAL ILLNESS INSURANCE

A

Provides a lump-sum benefit to an individual who is diagnosed with a specified serious life-altering illness or medical event, provided the individual survives for a specified short period after daignoses

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2
Q

CANCELLABILITY

A

Whether the insurance company can cancel the CI contract

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3
Q

TERM CI INSURANCE

A

Provideds coverage for a limiteds time or period, or term

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4
Q

GUARANTEED RENEWABLE

A

Insurance company must offer a new term to a specified date/age. Carrier cannot cancel the policy provoded the premiums are paid as required

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5
Q

CONDITIONALLY RENEWABLE

A

Innurance carrier may require new medical or other information to offer a new term.

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6
Q

TERM-TO-65, 70, 75, OR 100 INSURANCE

A

Type of permanent insurance product that does not renew

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7
Q

BIG 3 ILLNESSES

A

Life-threatening cancer, stroke, and heart attack

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8
Q

BENEFIT AMOUNT

A

A contractually defined amount established between quotation, underwriting and final contract acceptance

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9
Q

30-DAY WAITING PERIOD

A

Applied after the date of the diagnosis before receiving any money

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10
Q

EARLY-INTERVENTION CLAUSE

A

Insured may receive between 10%-25% of the benefit immediately

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11
Q

LONG-TERM CARE RIDER (LTC)

A

Allows entire benefit to be treated as the pool source of LTC payments, and a weekly or monthly benefit is calculated depending on the whether the insured is at home or in a facility

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12
Q

100% RETURN OF PREMIUM RIDER

A

On termination (expiry) of the contract, all premiums paid are returned to the owner

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13
Q

RETURN OF PREMIUM ON DEATH RIDER

A

Offers a full return of premiums paid as an insurance benefit directly to the insured’s beneficiaries if the insured pre-deceases his/her contract expiry.

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14
Q

SECOND EVENT RIDERS

A

Provide a second benefit equal to or less than the benefit from the first claim, depending on the definitions in the particular insurance comapny’s contract

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15
Q

WAIVER OF PREMIUM RIDER

A

Allows the client to skip premium payments if he/she is no longer working due to disability

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16
Q

POST-CLAIM UNDERWRITING

A

Insurer determines whether the coverage applies to the insured only once a claim is made

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17
Q

NON-CANCELLABLE INSURANCE CONTRACTS

A

Require a completion of a thorough medical history and financial and lifestyle questionnaire to establish insurability

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18
Q

STANDARD EXCLUSIONS

A

Acts of war, attempted suicide.other self-harm, abuse of drugs or alcohol, and criminal offences

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19
Q

EMPLOYER SPONSORED/ASSOCIATION SPONSORED GROUP BENEFIT PLANS

A

Conditionally renewable, non-cancellable one-yer term contracts owned by the group but offered to the individual

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20
Q

LONG-TERM CARE INSURANCE (LTC)

A

Insurance benefit that pays for the care or services that may be necessary, ruding the burden on an individual’s savings and increasing the affordability of care

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21
Q

ACTIVITIES OF DAILY LIVING (ADL)

A

The insured’s inability to perform activities

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22
Q

ELIMINATION PERIOD

A

The policy will only pay out benefits under certain specific conditions

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23
Q

HOME CRE

A

Care received while the insured is still living at home

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24
Q

FACILITY CARE

A

Time spent living at a facility

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25
Q

PROFESSIONAL CARE

A

Provided by professionals (nurses etc.)

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26
Q

SKILLED ACRE

A

Paid care provided by trained individuals (facility staff)

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27
Q

NON-SKILLED CARE

A

Provided by someone who is not trained (family members)

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28
Q

INCOME MODEL

A

Individual purchases a specific benefit amount, or income, that is paid regardless of the actual level of expenses

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29
Q

INDEMNITY MODEL

A

Individual purchases a policy that provides a daily benefit

30
Q

REIMBURSEMENT MODEL

A

Individual purchases a policy that provides reimbursement for covered expenses up to the daily/monthly maximum

31
Q

COST OF LIVING RIDER/FUTURE PURCHASE OPTIONS

A

Protect the benefit against the risks of inflation and increasing needs

32
Q

DURABLE MEDICAL EQUIPMENT RIDER

A

Individual receives benefit defined in the terms if he/she needs equipment

33
Q

WAIVER OF PREMIUM

A

Waives the cost of insurance while the insured is totally disabled

34
Q

RETURN OF PREMIUM ON DEATH RIDER

A

Ensures the value paid into the contract creates a small benefit for the estate of the insured if he/she dies before the expiry or payout

35
Q

ESTATE EQUALIZATION

A

When different assets are left to different beneficiaries but the net result is not equal

36
Q

INSURANCE TRUST

A

A testamentary trust that results from the payment of a death benefit

37
Q

LIVING BENEFIT (ACCELERATED BENEFIT)

A

Under a life insurance policy, the carrier allows the insured who is diagnosed with a terminal illness to receive a partial pre-payment of the death benefit

38
Q

FULL SURRENDER (DISPOSE/SURRENDER CONTARCT IN FULL)

A

The insurance carrier pays the policy owner the balance of the total cash value less any surrender charges

39
Q

PARTIAL SURRENDER (KEEP SOME OF THE CONTRACT/BENEFIT)

A

The amount surrendered is proportionate to the amount of the benefit surrendered

40
Q

% OF ISURNACE SURRENDERED

A

Surrender amount/Cash Surrender value

41
Q

PORPORTION TO THE BENEFIT AMOUNT SURRENDERD

A

% of insurance surrendered X Death Benefit

42
Q

NET DEATH BENEFIT

A

Total original benefit - Porpoertion of benefit surrendered

43
Q

NEW ACB

A

(1 - % of insurance surrendered) X ACB

44
Q

POLICY LOAN

A

Borrowing from the cash value of an insurance policy

45
Q

COLLATERAL

A

Borrowing against the cash value of an insurance policy

46
Q

BUY-SELL DISABILITY INSURANCE

A

Purchased to fund the buy-out of a disabled partner or shareholder in a business operation

47
Q

CORPORATELY OWNED CRITICAL ILLNESS INSURANCE

A

Designed to fund the short-term needs of a diagnosed shareholder or to assist in funding a buy-sell agreement.

48
Q

SPLIT DOLLAR POLICY

A

The corporation pays most of the contract premium at a lower tax rate, while the return of premium rider is paid personally

49
Q

KEY-PERSON INSURANCE

A

Insures against key-person loss, in the form of life, disability, or critical illness insurance. Provides immediate working capital while the business reorganizaes to address the loss of the key person

50
Q

DISABILITY KEY-PERSON INSURANCE

A

Pays a benefit based on the inusred’s salary and a percentage of replacement costs after a period (6 months)

51
Q

LIFE KEY-PERSON INSURANCE

A

Pays out a lump um benefit to the company to use as working capital, reserve funds or replacement costs

52
Q

BUSINESS OVERHEAD INSRUANCE

A

Provides interim insruancfe protection when the disability of a key person affects the income of a business

53
Q

EXEMPT POLICY

A

Designed primairly to provide life insurance protection (cash value accumulated may not exceed the government-determined benchmark). This type of policy is exempt from taxation

54
Q

HYPOTHETICAL BENCHMARK POLICY

A

An eight-pay endowment at age 90

55
Q

NON-EXEMPT POLICY

A

Any income, such as dividends, policy loans or gains aover the ACB are taxable annually

56
Q

MAXIMUM TAX ACTUARIAL RESERVE (MTAR)

A

The maximum amount of income an exempt policy may earn or accumulate

57
Q

ACCUMULATING ACCOUNT/ACCUMULATING FUND

A

The value of the whole life participating account or value of the universal life account that builds up outside the policy

58
Q

CASH SURRENDER VALUE (CSV)

A

The value of the total policy if the insured were to surrender, or give up, the contract

59
Q

DIVIDENDS ON DEPOSIT

A

A seperate savings account held by the insurance carrier

60
Q

FAIR MARKET VALUE (FMV) OF A LIFE INSURANCE POLICY

A

Value of the contract if it were to be sold on the market (the amount someone is willing to pay to acquire the contract). It is often the total of the cash surrender value and the value of the accumulating fund

61
Q

ADJUST COST BASE (ACB) OF A LIFE INSURANCE POLICY

A

The sum of all premiums paid, less the sum of the net cost of pure insurance. Represents the policyholder’s ACB of the cash value within the contract

62
Q

NET COST OF PURE INSURANCE (NCPI)

A

The amount that is the net cost of the mortality expenses (risk) based on the table prescribed in the ITA

63
Q

CAPITAL DIVIDEND ACCOUNT (CDA)

A

A notional account that results from the payment of a life insurance benefit to a corporation

64
Q

DISPOSITION

A

The disposal of the contract

65
Q

TAXATION ON INSURANCE DISPOSITON =

A

Proceeds (money earned from the contract) - ACB

66
Q

ABSOLUTE ASSIGNMENT

A

The complete transfer of the ownership (all rights, benefits and liabilities) of the policy completely to another party without any terms and condition.

67
Q

NON-ARM’S LENGTH

A

Willing to hug

68
Q

PARTIAL SURRENDER TAXATION =

A
  1. Assigned ACB = (Proceeds from partial surrender / total cash surrender value) X ACB
  2. Proceeds from partial surrender - Assigned ACB
69
Q

POLICY LOAN TAXATION +

A
  1. Remaining ACB = ACB - loan proceeds

2. Income gain on second loan = Second loan proceeds - remaining ACB

70
Q

INSURANCE TRANSFER ROLLOVERS

A

Original owner transfers the policy at the current ACB , and the new owner acquires the policy at the same ACB. Rollovers are permitted between spouses and between parent and his/her child if the policy is on the life of a child of the parent

ADVANCED ADVOCIS CURRICULUM PROGRAM (14 decks)

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