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Flashcards in Life Insurance Basics Deck (55)
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1

Purpose of insurance guaranty associations

Protect policy owners, insureds and beneficiaries from financial losses caused by insolvent insurers

2

What type of insurance creates an immediate estate?

Life insurance

3

Who must be a member of ins guaranty associations?

All insurers authorized to write insurance within a state

4

What are illustrations in a life insurance policy?

Presentations of nonguaranteed elements of the policy

5

What are the three main instances when insurable interest exists in life insurance?

Insuring your own life, life of a family member, life of business partner or someone who has financial obligation to the policyowner

6

When must insurable interest exist in a life insurance policy?

At the time of application

7

When must the policy summary for a life insurance policy be delivered to the policy owner?

At the time of policy delivery

8

How does the premium mode affect the total premium paid for insurance for the year?

Higher frequency of payments equals higher overall premium

9

Who is responsible for the content of insurance ads?

The company

10

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity

11

Who is the beneficiary on a key-person policy?

The employer

12

If the insured changes his payment plan from monthly to annually, what happens to the total premium?

It will decrease

13

When planning for survivor protection in life insurance, what needs to be considered?

The insured’s current assets, liabilities, and survivor’s needs

14

What document describes the specific information about a policy?

The policy summary

15

What does liquidity mean in a life insurance policy?

Availability of cash value

16

Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called?

Estate conservation

17

If an applicant for LI policy and the potential insured are two diff people, what is the underwriters main concern?

Existence of insurable interest between the two

18

Can companies advertise the guaranty association?

No

19

What is included in part 2 of a LI application?

Medical info about the prospective insured

20

What is the purpose of guaranty association?

To protect policyholders against loss caused by an insolvent insurance co

21

What type of insurance creates an immediate estate?

Life

22

What is the purpose of key person insurance

Minimize the financial loss caused by the death of a key employee

23

What are mortality tables used for

To predict life expectancy and death rates for specific groups of individuals

24

What type of insurance offers a cash value element?

Permanent insurance. Usually whole life

25

Purpose of the agents report during application process

Personal observations about the applicant that may help during underwriting

26

A business is the owner and beneficiary of a key-person policy. When the business collects the policy benefit how is it taxed?

It’s tax free

27

Term that describes frequency and amount of premium payment

Premium mode

28

3 factors that determine the premium for a particular life insurance policy?

Mortality, interest, expense

29

Who must have insurable interest in the insured?

The policyholder

30

When does coverage begin when an agent issues a conditional receipt?

Either the date of the application or the date of the medical exam, whichever happens last