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LLQP LIFE Flashcards

(60 cards)

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1
Q

What are the types of Life Insurance?

A
  • Participating Policies
  • Term Insurance
  • Whole Life Insurance
  • Universal Life Insurance
  • T-100 Term Insurance
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2
Q

What are the five options for dividends in Participating Policies?

A
  • Cheque payout
  • Deposit at interest
  • Paid Up Insurances (PUI’s)
  • Term Insurance
  • Premium reduction
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3
Q

What are the characteristics of Term Insurance?

A
  • Temporary
  • Expires at a certain time
  • Renewable
  • Convertible
  • Easy to understand
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4
Q

Define ‘Policyholder’.

A

Owner of the policy

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5
Q

What is a ‘beneficiary’ in life insurance?

A

Person to receive the death benefit

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6
Q

What is a Single Life policy?

A

One life is insured; death benefit paid out once the life insured is dead

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7
Q

What are the disadvantages of Term Insurance?

A
  • Low cost in early years
  • Simple to understand
  • Premiums set during term
  • Renewable and convertible to life insurance
  • No cash value
  • Term ends and expires
  • Loss of premium increases each renewable
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8
Q

What defines Whole Life Insurance?

A
  • Permanent
  • Coverage for life
  • Higher premiums as they stop earlier
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9
Q

What is the purpose of a Policy Reserve?

A
  • Cash reserve built in to pay for premiums in the future
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10
Q

What is meant by ‘Non-forfeiture’ in life insurance?

A

Cash the policy = lost the policy

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11
Q

What does ‘Paid Up Additions’ (PUAs) mean?

A

Pay a lump sum amount for extra coverage without new premiums added

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12
Q

What is the difference between Term Insurance and Permanent Insurance?

A
  • Term Insurance: Renewable, temporary, no cash value
  • Permanent Insurance: Permanent for life, cash value, higher premiums
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13
Q

What is T-100 Term Insurance?

A

Term Insurance to the age of 100; permanent insurance with no cash value

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14
Q

What is a spousal rollover?

A

Allows assets to transfer to a legally wed or common-law partner without immediate taxation

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15
Q

What are the death benefit options in Universal Life Insurance?

A
  • LEVEL
  • LEVEL + ACCOUNT
  • LEVEL + DEPOSIT
  • LEVEL + INDEX
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16
Q

True or False: A collateral loan uses the policy’s cash surrender value as collateral.

A

True

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17
Q

What is the taxation implication of a policy loan?

A

Difference between loan amount and ACB (Adjusted Cost Base) = Taxable

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18
Q

What are Living Benefits in insurance?

A
  • Accelerated Benefit
  • Terminal Illness
  • Dread Disease and Critical Illness
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19
Q

What is the purpose of Group Insurance?

A

Master contract between policy insurer; employer is the group owner

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20
Q

What does ‘probationary/waiting period’ refer to in Group Insurance?

A

Time before coverage begins after enrollment

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21
Q

What is the benefit of having a Joint Last Survivor policy?

A

Coverage paid out at the death of the second person

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22
Q

What does ‘Accelerated Death Benefit’ mean?

A

Benefit received while one is alive reduces the death benefit

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23
Q

Fill in the blank: A _______ is a person whose life is insured.

A

[life insured]

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24
Q

What is the role of ‘interest income’ in Universal Life Insurance pricing?

A

It is one of the costs that are separated in the unbundled product

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25
What is the main purpose of T-100 insurance?
To ensure that your estate gets transferred to the next generation with no tax implication
26
What is a 'policy loan'?
Loan taken against the cash value of the policy
27
What happens to the coverage upon partial withdrawals?
Reduction in coverage
28
Who is considered the payer in an insurance contract?
The insured is not the payer.
29
What is a master contract in group insurance?
A contract between the policy insurer and the employer, who is the group owner.
30
What must individuals meet to be eligible for group insurance?
Eligibility criteria.
31
What is a probationary/waiting period in group insurance?
The period before coverage begins.
32
What does enrolment refer to in the context of group insurance?
The time to enroll without evidence of insurability.
33
In group insurance, what defines a dependent?
Spouse and unmarried children.
34
How are premiums determined in group insurance?
Based on the entire group, and can be adjusted annually by the insurer.
35
What is a contributory plan?
A type of group insurance plan where members contribute to the premium.
36
What is a non-contributory plan?
A type of group insurance plan where the employer pays the full premium.
37
What is the tax treatment of death benefits in life insurance?
Death benefits are tax-free.
38
Are premiums tax deductible for the member in group insurance?
No, premiums are not tax deductible for the member.
39
What are the parties involved in an insurance contract?
Insurer, insured, and life insured.
40
What type of insurance is it if the insured and life insured are the same person?
Personal insurance.
41
What is third-party insurance?
When the insured and life insured are not the same person.
42
Name the types of beneficiaries in life insurance.
* Person(s) * Class of Person(s) * Business * Trust * Estate
43
What is a revocable beneficiary?
A beneficiary designation that can be changed by the policyholder.
44
What is an irrevocable beneficiary?
A beneficiary designation that cannot be changed without the beneficiary's consent.
45
What is the adjusted cost basis (ACB) in life insurance?
What it cost to buy the policy.
46
How is policy gain calculated?
Proceeds of disposition minus ACB.
47
What happens to the ACB after a policy is surrendered?
It is prorated based on the amount withdrawn.
48
What is the minimum premium for exempt status policies?
Small cash value, insurance.
49
What is the maximum premium for exempt status policies?
High cash value, up to MAX TAX ACTUARIAL RESERVE (MTAR).
50
What happens if a policy loses its exempt status?
It cannot regain exempt status.
51
What is the Anti-dump Rule in life insurance?
Limits large lump sum deposits to maintain exempt status.
52
What is an absolute assignment of a policy?
An arms-length transaction involving the transfer of ownership.
53
What is a non-arm's length assignment?
Transfer of a policy between close relatives, such as spouses.
54
What is a buy and sell agreement in business life insurance?
An agreement ensuring funds to purchase the other party's shares.
55
What is the Capital Gain Exemption?
Applies to Canadian controlled private corporations to encourage entrepreneurship.
56
What is the purpose of Corporate Owned Life Insurance?
To hold death benefits and tax obligations.
57
What is required for insurable interest?
A potential monetary loss must exist.
58
True or False: Material misrepresentation voids an insurance policy.
True.
59
What is the Income Replacement Approach in insurance need analysis?
Calculating insurance needs based on economic value and last expenses.
60
Fill in the blank: The __________ of income is the economic value of one individual.
Capital

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