agent
legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer
insured
the person covered by the insurance policy; this person may or may not be the policyowner
broker
an insurance agent not appointed by an insurer and is deemed to represent the client
insurance policy
a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
insurer
the company who issues an insurance policy
policyowner
the person entitled to exercise the rights and privileges in the policy
premium
the money paid to the insurance company for the insurance policy
reciprocity
a mutual interchange of rights and priveleges
risk
the uncertainty or chance of a loss occurring
pure risk
situations that can only result in a loss or no change; no opportunity for financial gain
speculative risk
involves the opportunity for either loss or gain; not insurable
hazard
condition or situation that increases the probability of an insured loss occurring
physical hazard
individual characteristic that increases the chance of a cause of loss; exists because of a physical condition, past medical history, or condition at birth (i.e. blindness)
moral hazard
tendency towards increased risk; involves evaluating the character and reputation of the proposed insured; these applicants may lie on an application for insurance, or have submitted fraudulent claims in the past
morale hazard
similar to moral hazards; arise from a state of mind that causes indifference to loss, such as carelessness; actions taken without forethought may cause physical injuries
peril
the cause of the loss insured against in an insurance policy
life insurance
insures against the financial loss caused by the premature death of the insured
health insurance
insures against the medical expenses and/or loss of income caused by the insured's sickness or accidental injury
property insurance
insures against the loss of physical property or the loss of its income-producing abilities
casualty insurance
insures against the loss and/or damage of property and resulting liabilities
loss
the reduction, decrease, or disappearance of value of the person or property insured in a policy, caused by a named peril; insurance provides a means to transfer loss
sharing risk
a method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group; a reciprocal insurance exchange is a risk-sharing arrangement
transfer risk
the loss is borne by another party; will not eliminate the risk of death or illness, but relieves the insured of the financial losses these risks bring
avoidance of risk
eliminating exposure to a loss
retention
also known as self-insurance when the insured accepts the responsibility for the loss before the insurance company pays; planned assumption of risk by an insured through the use of deductibles, copayments, or self-insurance
reduction
includes actions such as installing smoke detectors in our homes, having an annual physical to detect health problems early, or perhaps making a change in our lifestyles
due to chance
a loss that is outside the insured's control
definite and measurable
a loss that is specific as to the cause, time, place, and amount; an insurer must be able to determine how much the benefit will be and when it becomes payable
statistically predictable
insurers must be able to estimate the average frequency and severity of future losses and set appropriate premium rates
not catastrophic
insurers need to be reasonably certain their losses will not exceed specific limits; this is why insurance policies will typically exclude coverage for loss caused by war or nuclear events
randomly selected and large loss exposure
there must be a sufficiently large pool of the insured that represents a random selection of risks in terms of age, gender, occupation, health and economic status, and geographic location
Stock companies
owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses
nonparticipating policies
in which policyowners do not share in profits or losses
mutual company
owned by the policy owners and issue participating policies (policyowners are entitled to dividends, which, in the case of mutual companies, are a return of excess premiums and are therefore nontaxable)
Certificate of authority
business owners must be granted a license from the state department of insurance and meet any financial (capital and surplus) requirements set by the state
Domestic insurer
an insurance company that is incorporated in this state
Foreign insurer
an insurance company that is incorporated in another state or territorial possession (i.e. Puerto Rico, Guam, or American Samoa)
Alien insurer
an insurance company that is incorporated outside of the United States
The law of agency
the relationship between the principal and the agent/producer within the scope of authority are deemed to be the acts of the insurer
Express authority
the authority a principal intends to grant to an agent by means of the agent's contract
Implied authority
authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal
Apparent authority
also known as perceived authority; the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created
Fiduciary responsibility
a legal obligation that says that an agent has to treat applicants and insureds in an ethical manner
Market conduct
the way companies and producers should conduct their business
Code of Ethics
producers must adhere to certain established procedures, and failure to comply will result in penalties
Contract
an agreement between two or more parties enforceable by law
Agreement
takes place when an insurer's underwriter approves the application and issues a policy
Consideration
something of value that each party gives to the other
Competent parties
must be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol
Legal purpose
there has to be insurable interest in any life insurance policy and consent; a contract without a legal purpose is considered void, and cannot be enforced by any party
Reasonable expectations
if something is not clearly stated, or there is a gray area, the courts are going to have a more positive relationship with the clients
Indemnity
sometimes referred to as reimbursement; a provision in an insurance policy that states that in the event of loss, an insured or beneficiary is permitted to collect only to the extent of the financial loss
Utmost good faith
implies that there will be no fraud, misrepresentation, or concealment between the parties
Representations
statements believed to be true to the best of one's knowledge, but are not guaranteed to be true
Material misrepresentation
a statement that, if discovered, would alter the underwriting decision of the insurance company; if material misrepresentation is intentional, it is considered fraud
Warranties
an absolutely true statement upon which the validity of the insurance policy depends
Concealment
the legal term for the intentional withholding of information of a material fact that is crucial in making a decision; in insurance, this is the withholding of information by the applicant that will result in an imprecise underwriting decision
Fraud
the intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party
Beneficiary
a person who receives the benefits of an insurance policy
Death benefit
the amount paid upon the death of the insured in a life insurance policy
Cash value
equity amount accumulated in permanent life insurance
Estate
a person's net worth
Illustrations
presentation or depiction of nonguaranteed elements of a life insurance policy
Life insurance
coverage on human lives
Liquidation
selling assets in order to raise capital
Lump-sum
payment of the entire benefit in one sum
Minor
a person under legal age
Solvency
ability to meet financial obligations
Insurable interest
the policyowner must face the possibility of losing money or something of value in the event of loss
survivor protection
The death of a nonearning spouse who cares for minor children can also cause great financial hardship for the survivors; can also provide any funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of his/her d
Liquidity
the policy's cash values can be borrowed against at any time and used for immediate needs
Asset protection
the use of life insurance to guard one's wealth against creditor claims without engaging in practices that are ultimately illegal, such as concealment or fraudulent transfer
Viatical settlements
allow someone living with a life-threatening condition to sell their existing life insurance policy and use the proceeds when they are most needed, before their death
Viatical producers
represent the providers
Chronically ill
a condition in which a person is unable to perform at least two activities of daily living or that requires substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment
Terminally ill
a condition that can reasonably be expected to result in death within 24 months
Viator
the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract
Viatical settlement broker
a licensed person that, for a fee, negotiates viatical settlement contracts between the viator and viatical settlement providers; represents the viator
Viatical settlement provider
a person (other than a viator) who enters into or effectuates a viatical settlement contract; does not include a bank, financing entity, or the issuer of a life insurance policy providing accelerated benefits
Viatical settlement purchaser
anyone who gives a sum of money as a consideration for life insurance policy or interest in the death benefits of a life insurance policy; also means a person who owns, acquires or is entitled to a beneficial interest in a trust that owns a viatical settl
Fraudulent viatical settlement act
an act or omission committed knowingly or with intent to defraud for the purpose of depriving another of property or for monetary gain by a person who commits or permits employees or agents to be fraudulent
Life settlement
any financial transaction in which the owner of a life insurance policy sells a policy that is no longer needed to a third party for some form of a compensation, usually cash
Human life value approach
gives the insured an estimate of what would be lost to the family in the event of the premature death of the insured
Needs approach
based on the predicted needs of a family after the premature death of the insured
Costs Associated with Death (Post Mortem)
taking into account the final medical expenses of the insured, funeral expenses, and day-to-day expenses family maintenance
Debt Cancellation (as an alternative to estate liquidation)
paying off debts of the insured such as a home mortgage, or auto loans; most lenders require a collateral assignment of life insurance as a condition for a loan
Emergency Reserve Funds
paying for unexpected expenses following the death of the insured, such as travel expenses and lodging for family members
Education funds
paying for a children's education expenses so they can remain in school or for a surviving spouse who may need additional training or education in order to re-enter the job market
Retirement fund
as a source of retirement income
Bequests
leaving funds to the insured's church, school, or a charity
Key person insurance
a business can lessen the risk of loss
Changed of insured provision
in the event the key employee quits or is terminated, the business may transfer the coverage to the replacement employee, subject to evidence of insurability
Buy-sell agreement
a legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled
Cross purchase
used in partnerships when each partner buys a policy on the other
Entity purchase
used when the partnership buys the policies on the partners
Stock purchase
used by privately owned corporations when each stockholder buys a policy on each of the others
Stock redemption
used when the corporation buys one policy on each shareholder
Executive bonus
an arrangement where the employer offers to give the employee a wage increase in the amount of the premium on a new life insurance policy on the employee
Term life insurance
temporary life insurance provided for a specific period of time
Permanent life insurance
refers to various forms of whole life insurance policies that remain in effect to age 100, as long as the premium is paid; provides lifetime protection and includes a savings element; nonparticipating policy does not pay dividends to the policyowners
Fixed life insurance
contracts that offer guaranteed minimum or fixed benefits that are stated in the contract
Variable life insurance
contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance; keep pace with inflation, and are determined by the value of securities backing it
Group life insurance
written as a master policy covering the lives of more than one individual covered under the single policy
Solicitation of insurance
an attempt to persuade a person to buy an insurance policy
illustration
a presentation or depiction that includes the nonguaranteed elements of a policy of individual or group life insurance over a period of years
Buyer's guide
provides basic, generic information about life insurance policies that contains and is limited to, language approved by the Department of Insurance
Policy summary
a written statement describing the features and elements of the policy being issued
Traditional net cost index
compares the cash values available to buyers if they surrender the policy in 10 or 20 years; does not consider time value of money
Interest-adjusted net cost index
compares the death benefits that are paid at death in 10 or 20 years, if the insured died at that time, and accounts for the time value of money
Replacement
a practice of terminating an existing policy or letting it lapse, and obtaining a new one
Replacing insurer
the company that issues the new policy
Existing insurer
the company whose policy is being replaced
underwriting
the risk selection and classification process
field underwriter
the agent is usually the one whose solicited the insured
application
the starting point and basic source of information
agent's report
provides the personal observations concerning the proposed insured; do not have to fill one out for every client
premium receipt
must be issued any time an agent collects a premium
conditional receipt
says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant if found to be insurable as a standard risk, and policy is issued exactly as applied for
attending physician statement
not your family doctor; your specialist's report
investigative consumer report
general report of the applicant's finances, character, work, hobbies, and habits
medical insurance bureau
MIB; nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals; helps companies to compare the information they have collected on a potential i
medical exam
conducted by physicians or paramedics at the insurance company's expense
standard risk
person who, according to the company's underwriting standards, are entitled to insurance protection without extra rating or special restrictions; representative of the majority of people at their age and with similar lifestyles
substandard risk
applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits; high exposure
preferred risk
an individual who meets certain requirements and qualifies for lower premiums than the standard risk; has a superior physical condition, lifestyle, and habits
declined risk
risk that the underwriters assess as not insurable
mode
the frequency the policyowner pays the premium
delivery receipt
states the date the contract was received; insured must sign
cash on delivery
COD; occurs if you haven't collected premiums
Accumulate
build up
Attained age
the insured's age at the time the policy is renewed or replaced
Cash value
a policy's savings element or living benefit
Deferred
withheld or postponed until a specific time or event in the future
Endow
to have the cash value of a whole life policy reach the contractual face amount
Face amount
the amount of benefit stated in the life insurance policy
Fixed life insurance products
contracts that offer guaranteed minimum or fixed benefits
Lapse
policy termination due to nonpayment of premium
Level premium
the premium that does not hcange throughout the life of a policy
Nonforfeiture values
benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
Policy maturity
in life policies, the time when the face value is paid out
Securities
financial instruments that may trade for value (for example, stocks, bonds, options)
Variable life insurance products
contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
term insurance
temporary protection because it only provides coverage for a specific period of time; greatest amount of coverage for the greatest premium
level term insurance
the death benefit does not change throughout the life of the policy
decreasing term insurance
features a level premium and a death premium that decreases each year over the duration of the policy term; used typically to pay mortgage or other debts (as these debts decrease, so does the coverage)
increasing term insurance
features a level premium and a death premium that increases each year over the duration of the policy term; used by the insurance company to fund certain riders (return of premiums) and used for cost of living
annual renewable term
ART; the purest form of term insurance; death benefit remains level and policy may be guaranteed to be renewable each year without proof of insurability; premium increases annually according to the attained age, as the probability of death increases
renewable provision
allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability; based on insured's current age
convertible provision
allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability; based on insured's attained age
Permanent life insurance
refers to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100)
Whole life insurance
provides lifetime protection, includes a savings element (or cash value [also known as loan value, living benefit, nonforfeiture value])
Level premium
the premium for whole life policies is based on the issue age; therefore, it remains the same throughout the life of the policy
Death benefit
guaranteed and also remains level for life
Living benefit
borrowing money against the cash value; does not typically accumulate until the third policy year and it grows tax deferred
straight life
also referred to as ordinary life or continuous premium; the basic whole life policy; the policyowner pays the premium from the time the policy is issued until the insured's death or age 100
limited payment
premiums for coverage will be completely paid-up well before age 100; the shorter the pay period, the higher the premium
adjustable life
developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage)
universal life
also known as flexible premium adjustable life, bundled, or interest-sensitive policy; the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again, or even to skip a premium, as long as there a
minimum premium
the amount needed to keep the policy in force for the current year
cash account
can take money out that you don't have to pay back, but for a fee; don't have to tell you that your cash value is going down and can close it without telling you
option A
beneficiary gets the face amount alone
option B
beneficiary gets the face amount and the value of the cash account
indexed whole life
standard and poor 500
variable life insurance
not guaranteed; going to fluctuate with the performance of the portfolio in which the premiums have been invested by the insurer; you need your life insurance license and securities license to sell this type of insurance; level, fixed premium, investment-
separate account
invests in stocks, bonds, and other securities investment accounts
variable universal life
a combination of universal life and variable life; provides the policyowner with flexible premiums and an adjustable death benefit; cash values are not guaranteed and death benefit is not fixed
joint life
a single policy that is designed to insure two or more lives; based on joint average age; upon first death, death benefit gets paid out
survivorship life
two or more people; based on joint average age; when the first person dies, nothing happens; when the second person dies, the death benefit is paid out to your beneficiary
juvenile life insurance
life insurance policy on the written on the life of a minor; death benefit jumps when child takes policy for him/herself; premium stays the same
group life insurance
covers the lives of more than one individual member of that group; usually written for employee-employer; annual renewable term; evidence of insurability is not usually required
purpose of the group
the group must be created for a purpose other than to obtain group insurance
size of the group
the larger the number of people in the group, the more accurate the projections of future loss experience will be
turnover of the group
from the underwriting perspective, a group should have a steady turnover: younger, lower-risk employees enter the group, and older, higher-risk employees leave
financial strength of the group
because group insurance is costly to administer, the underwriter should consider whether or not the group has the financial resources to pay the policy premiums, and whether or not it will be able to renew the coverage
Provisions
stipulate the rights and obligations of an insurance contract and are fairly universal from one policy to the next
Riders
modify provisions that already exist and are used to increase or decrease policy benefits and premiums
Options
offer insurers and insureds ways to invest or distribute a sum of money available in a life policy
Activities of daily living
a person's essential activities that include bathing, dressing, eating, transferring, toileting, and continence
Assignment
transfer of rights of policy ownership
Contingent beneficiary
a beneficiary who has second claim to the policy proceeds after the death of the insured (only after the death of the primary beneficiary)
NAIC
national Association of Insurance Commissioners, an organization composed of insurance commissioners from all 50 states, the District of Columbia and the 4 U.S. territories, formed to resolve insurance regulatory issues
Primary beneficiary
a beneficiary who has the first claim to the policy proceeds after the death of the insured
Principal amount
the face value of the policy; the original amount invested before the earnings
Trust
an arrangement in which funds or property are held by a person or corporation for the benefits of another person (trust beneficiary)
chronically ill
can't do two or more ADLs
ownership
your rights, as the owner; naming and changing the beneficiary, receiving the policy's living benefits, selecting a benefit payment option, and assigning the policy
assignment
giving over your rights to the policy; does not change the insured or amount of coverage
absolute assignment
involves transferring all rights of ownership to another person or entity
collateral assignment
involves a transfer of partial rights to another person; usually done in order to secure a loan or some other transaction and once the debt is repaid, the assigned rights are returned to the policyowner
entire contract
consists of the policy and a copy of the application
payment of premium
when they're due, how often, and to whom
right to examine
also known as free look; allows the policyowner 10 days from receipt to look over the policy and if dissatisfied for any reason, return it for a full refund of premium
grace period
policy is in force; period of time after the premium due date that the policyowner has to pay the premium before the policy lapses
reinstatement
allows a lapsed policy to be put back in force; maximum time limit for reinstatement is usually three years after the policy has lapsed
misstatement of age/sex
a provision which allows the insurer to adjust the policy at any time due to a misstatement of age or gender is included in the policy; in the event of a claim, the insurer is allowed to adjust the benefits to an amount that the premium at the correct age
incontestability
prevents an insurer from denying a claim due to statements in the application after the policy has been in force for two years, even if there has been a material misstatement of facts or concealment of a material fact
payment of claims
under receipt of a written proof of loss, the insurer must pay death claims immediately
exclusions
the types of risks the policy will not cover
status clause
says that it will exclude all causes of death while the insured is on active duty
results clause
if you die because of an act of war
aviation
will cover passengers or pilots on a regular airline; will not cover noncommercial pilots
suicide
protects the insurers from individuals who purchase life insurance with the intention of committing suicide; if you don't wait two years and one day after starting a life insurance policy, they don't have to cover you
hazardous occupations or hobbies
can charge a higher premium if you have a hazardous occupation or hobby
per capita designation
split among living beneficiaries; if one has died, he/she gets nothing
per stirpes designation
if policyowner indicates his children, but one dies, each of the dead child's children will get a cut and the other two children will get cuts as well
estates
May occur if no beneficiaries are alive or no beneficiaries were indicated; if you don't have a beneficiary, it goes to your estate
trusts
Established for minors, to create a scholarship fund, or estate purposes
revocable designation
may change this at any time without the consent or knowledge of the beneficiary
irrevocable designation
may not be changed without the written consent of the beneficiary
common disaster clause
within the uniform simultaneous death law; if the insured and the primary die at approximately the same time with no clear evidence of the cause of death, you will protect the policyowner's original intent
spendthrift clause
instead of getting a lump-sum, you get installments
automatic premium loans
prevents unintentional lapse of a policy due to nonpayment of the premium
rider
a written modification attached to a policy that requires additional premium
waiver of premium rider
if you are disabled for six months, the premium is waived; this will continue to happen until you return to work or die
disability income
waives the premium if you are disabled and pays you an income based on a percentage of the face amount
payor benefit
primarily used with juvenile policies; if the payor (parent/guardian) becomes disabled for at least six months o dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21
riders covering additional insured
adding your spouse onto your policy and paying as part of your premium
children's term rider
allows children of the insured to be added to coverage for a limited period of time for a specified amount
family term rider
put the spouse and the child together
accidental death rider
pays some multiple of the face amount if death is the result of an accident as defined in the policy
guaranteed insurability
guaranteed to be insurable and can increase your death benefit without proof of insurability
accelerated benefit
allows an early payout of your policy due to terminal illness, inability to perform ADLs, moved to a long-term care facility, any other condition that the department of insurance agrees to
living needs rider
pays a part of the policy due to terminal illness
long term care rider
in order to pay and take care of the individual's expenses in a nursing home
options
the choices on how money is being paid out
extended term
insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy; available for a shorter period of time; automatic option that is chosen if policyowner doesn't choose one
cash surrender value
will not need to pay to take the cash and run; if the cash value exceeds the premiums paid, the excess is taxable as ordinary income
Cash payment
not taxable
Reduction of premium
reducing your premium
Accumulation at interest
insurance company is going to keep the money in an account while it accumulates interst; the insurance is always taxable
Paid-up additions
dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy; automatic option that is chosen if the policyowner doesn't choose one
One-year term
use your dividends and buy a one-year term policy
life-income otion
provides the recipient with an income that he or she cannot outlive
single life option
can provide a single beneficiary income for the rest of his/her life
interest only option
the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals (monthly, quarterly, semiannually, or annually) until they decide what they want to do; temporary option
fixed-period installments
a specified period of years is selected, and equal installments are paid to the recipient; payments will continue for the specified period even if the recipient dies before the end of that period; the longer the period selected, the smaller the payments w
fixed-amount installments
pays a fixed, specified amount in installments until the proceeds are exhausted; recipient selects specified fixed dollar amount to be paid before proceeds are gone
retained asset accounts
RAA; an interest-bearing money market
liquidation of an estate
converting a person's net worth (money) into a cash flow
favorable tax treatment
tax deferred growth; putting your money into an account where the money grows with cash and interest, but you don't pay taxes until later
suitability
a requirement to determine if an insurance product or an investment is appropriate for a particular customer
annuity
a contract that provides income for a specified period of years, or for life
owner
the person who is putting money into an annuity; has all the rights
annuitant
the person who takes money out; must be a natural person (no animals or companies)
beneficiary
the person who receives the annuity assets, or the amount of money paid into the annuity or cash value (whichever is greater), if the owner dies before claiming the money
accumulation period
the period of time over which the owner makes payments into an annuity and these payments earn interest on a tax-deferred basis
annuity period
also known as pay-out period, annuitization period, or liquidation period; the time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant
date of annuitization
the specific day that an annuity goes from the pay-in period to the pay-out period; should not be before the annuitant is 59� to avoid a 10% tax penalty
single premium
pay one time into an annuity and it's finished; this money will grow interest from that point on
flexible premium
also known as level premium; the amount and frequency of each installment varies
immediate annuity
has to be purchased with a single lump-sum payment because it will provide monthly payments within the first year; used when the beneficiary is under 59�
deferred annuity
can be a lump-sum, but can also be periodic payments; used when the beneficiary is under 59�
surrender charge
helps compensate the company for loss of the investment value due to an early surrender of a deferred annuity
surrender charge
helps compensate the company for loss of the investment value due to an early surrender of a deferred annuity
waiver
provided if the annuitant is confined to a long-term care facility for at least 30 days
bail-out provision
in the event that interest rates drop a specified amount within a specified time frame, to surrender the contract without charge
fixed annuity
guaranteed minimum rate of interest; income payments do not vary from one to the next regardless of inflation; safest option
general account
comprised mostly of conservative investments like bonds; secure enough to allow the insurance company to guarantee a specified rate of interest, as well as assure the future income payments that the annuity will provide
interest rate guarantees
rate may not drop below a policy's guaranteed minimum
indexed annuities
fixed annuities that invest on a relatively aggressive basis to aim for higher returns; has a guaranteed minimum interest rates
interest rate
issuing insurance company does not guarantee minimum interest rate
pure life annuity
also known as life only or straight life; this payment is going to cease at the annuitant's death; this is going to provide the highest monthly benefit due to the omitting of beneficiaries
refund life
if the annuitant dies before the paid-in amount is paid-out, the remainder of the principal amount will be refunded to the beneficiary with no interest
single life annuity
covers one life
multiple life annuity
covers two or more lives
joint life annuity
a payout arrangement in which two or more annuitants receive payments until the first death among the annuitants, and then payments stop
joint and survivor arrangement
a modification of the life income option in that it guarantees an income for two recipients that neither can outlive
earned income
salary, wages, or commissions, but not income from investments, unemployment, benefits, and similar
qualified retirement plan
approved by the IRS, which then gives both the employer and employee benefits such as deductible contributions and tax deferred growth; benefits the employees only, must be formally written, must be inclusive of all employees, and have a vesting requireme
nonqualified plans
not subject to the requirements regarding participation, discrimination, and vesting as qualified plans
IRA
based on earned income, must make pretax contributions (only allowed to contribute until you are 70 1/2, up to a certain dollar amount, and married pays half as much as singles)
roth IRA
based on earned income, after-tax contributions (interest is tax-free)
profit sharing plans
qualified plans where a portion of the company's profit is contributed to the plan and shared with employees
401k
qualified retirement plan that allows employees to take a reduction in their current salaries by deferring amounts into a retirement plan; company can also match the employee's contribution, whether it is dollar for dollar or a percentage; participants ov
403B
for nonprofit organizations and for employees in the public school system; contributions can be made by employer or employee, and can be deducted from one's salary
rollover
tax-free distribution of cash from one retirement plan to another; must be done within 60 days or these funds are not tax-free
transfer
going from one company to another
coercion
forceful act or threat aimed to influence a person to act against his or her will
nonresident producer
individual or business entity currently licensed as a resident producer in another state, may apply to the Department for a nonresident producer license, for line of authority equivalent to their existing license
temporary license
allows for the continuation of the producer's business; surviving spouse, next of kin, or deceased producer
certificate of authority
granted by the commissioner and indicates that the commissioner has examined the business and found it to be financially stable and organized in accordance with the Insurance Code
solvency
determining whether the continued operation of any insurer might be financially hazardous to policyholders, creditors, or to the public in general
cease and desist order
whenever it appears that a person has violated an insurance law of Pennsylvania, or any rule or regulation made by the commissioner
consent agreement
accused does not admit or deny the charges, but agrees to pay a fine; will still be held liable in the court of law
rebating
an inducement that's not specified in the policy; offering something in exchange for the purchase of insurance
twisting
persuading a client to do something that's not in their best interest
defamation
cannot talk badly about another specific insurance company (i.e. State Farm)
fair credit reporting act
established procedures that consumer reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used
investigative consumer report
information on the consumer's character, reputation, and habits
unlawful insurance fraud
saying or writing something that's not true or omits material facts
What insurance concept is associated with the names Weiss and Fitch
Guides describing company financial integrity
In an Adjustable Life policy all the following can be changed bythe policy owner.
The length of coverage
The premium
The amount of insurance
All of the following are characteristics of group life insurance
Amount of coverage is determined according to nondiscrimatory rules.
Individuals covered under the policy receive a certification of insurance.
Certificate holders may convert coverage to an individual polcy without evidenace of insurability.
Which of the following would NOT cause the Death Benefits to increase
Payor Benefit Rider
When would a 20-pay whole life policy endow
When the insured reaches age 100
The waiver of Cost of insurance rider is found in what type of insurance
Universal Life
The LEAST expensive first-year premium is found in which policy
Annually Renewable Term
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and Survivor
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of Adhesion
Which of the following statements about group life is correct
The cost of coverage is based on the ratio of men and women in the group