Life Insurance: Cram Course # 2 Flashcards Preview

Insurance License Exam > Life Insurance: Cram Course # 2 > Flashcards

Flashcards in Life Insurance: Cram Course # 2 Deck (91)
Loading flashcards...
1

The amount paid to the beneficiary under an insurance policy upon the death of the insured is called:

Death Benefit

2

Insurance that is designed to protect against the risk of premature death.

Life Insurance

3

What does a Stock Insurance company doing business on a Mixed Plan mean?

The company offers both Participating (dividends- more expensive) and Non-participating (no dividends) Insurance.

4

Name and describe three basic kinds of Life Insurance.

Ordinary Life- Temporary (Term) / Permenant (WL, UL, VUL, etc.)

Industrial Life- Debit, Home Service

Group Life- Employee/Employer

5

In life insurance, the rate at which a specific population dies.

Mortality

6

The two basic approaches used to determine the amount of insurance an individual needs are:

1) Human life value approach
2) Needs Approach (most used today)

7

No legal action may be taken prior to _____ days after written proof of loss is provided to the insurer.

60 days

8

What is an Emergency Fund used for?

Pays for maintenance, repairs, medical bills, loss of job, etc.

9

An individual's valid concern for the continuation of the life or well-being of the person insured.

Insurable Interest

Example: Yourself, Family, Business Partner, Creditors

10

When does insurable interest have to exist?

At policy inception, at the time of the application.

11

What does life insurance guarantee?

A specified sum of money upon the death of the insured.

12

* This allows for a business to "buy out" the interest of a deceased owner. The company owns the policy on the life of the owner and the premiums are tax-deductible.

* Sole Proprietors can make it possible for the employee to buy their business,

* The employee owns the policy on the life of proprietor; it is not tax deductible to the employee.

Features of Buy/Sell Plans

13

What is business interruption insurance?

Key-person Insurance- the beneficiary is the business. It is a business asset.

14

Partners purchase insurance on each other individually; the partnership itself is not involved.

Partnership Cross Purchase Insurance

15

In a Partnership Cross-Purchase Plan, how many policies would be required for three partners?

6 policies (they each buy 1 policy on the other partners)

16

Term insurance is __________.

Temporary

17

Term Insurance provides insurance for a ________ time and pays _______ if the insured ________ during that period.

Specified
Only
Dies

18

In a Decreasing Term policy the premium stays ______, and the face amount systematically ________ to zero by the end of the term.

Level
Decreases

19

This allows an insured to convert a term policy to whole life without proof of insurability.

Option to convert

20

Which policy has lower payments the first years (usually 5 years) then higher than typical thereafter?

Modified Whole Life

21

Comprised of Variable Life and Variable Annuities. These products invest premium dollars in securities, which carry more risk due to price fluctuations. A securities license is required to sell these products.

Variable Insurance

22

What type of policy covers two people and pays death benefit when the first one dies?

Joint Life Policy

23

What type of policy covers two people and pays a death benefit only when the second insured dies?

Joint & Last Survivor Policy
AKA Second to die policy

24

What type of insurance covers the life of a debtor for the amount of a loan?

Credit Life Insurance
AKA Decreasing Term (Mortgage insurance or Credit Life)

25

What is another name for Whole Life Insurance?

Permanent and Cash Value Insurance

26

When does Whole Life Insurance mature?

At age 100. If the policyowner is alive, check is paid to them for Full Face Amount.

27

The most common type of insurance used in a group policy is?

Annual Renewable Term Insurance

28

What insurance protects against the risk that a person in debt cannot repay the debt to the creditor because of accident, sickness, disability, or death?

Credit Life Insurance

29

What type of products must all investments be kept in a separate account and not co-mingled with other assets?

Variable Products

30

What is Universal Life Insurance?

Term insurance with a policy value fund