third party policyholder
It is called _____ ______ ownership when the insured is the family member or key person and the ____________ is one of the other family members or a business owner.
ownership loan
The owner of the policy retains all rights of __________. Including the right to name a beneficiary, pay the premium take a ____ or cash surrender.
written
If the third party insured is an adult, that person's _______ consent is also required.
state
Life insurance has been regulated by _____ law (not federal)
act federal state
In the 1940s, Congress passed the McCarran ___, which states that the _______ government has the right to regulate the business of insurance, but only to the extent that it is not regulated by ____ law.
variable investment securities
If an insurance contract contains _________ features, in which the client bears the ____________ risk, the contract will come under federal __________ law
annuities life separate security
Since boy variable _________ and variable ____ insurance contracts place the client's funds in ________ accounts, (similar to mutual funds,) these policies must meet the definition of a ________ as defined under the Federal Securities Act of 1933
SEC NASD Prospectus
Federal securities laws are enforced by the ___. A producer selling these must also register with the _____ in addition to having his state life insurance license. Due to the risk of variable products, a producer must also give his client a disclosure doc
protection
The main purpose of life insurance is to offer _________ to your survivors in the event of your death.
creation cash estate
Personal uses of life insurance include the _______ of an estate, ___ accumulation, liquidity, ______ conservation and viatical settlements
cash value surrender
If the client lives, the accumulated _____ ______ may be borrowed from the insurer or the client may elect to ________ his policy for its cash value at any time, providing instant liquidity
estate tax
A wealthy client may purchase life insurance simply to pay _______ taxes, thereby insuring that their estate will pass on to their heirs intact and without further estate ___ obligations.
rights payment beneficiary
In Viatical settlements a terminally ill person gives up their _____ to the policy in exchange for advance ________ of a portion of the death proceeds. The policy is sold to an investor who names himself ____________ and he will receive the face amount wh
need expense education income
When determining the amount of life insurance the needs approach simply determines the ____s of the individual. Needs include burial _______, family maintenance, children's ________ and continuing ______ for the surviving spouse
value potential years
The second approach is the Human life _____ approach, it is based on the earning _________ of the insured projected over a period of future _____
income liquidate interest
When planning for _____ needs, the beneficiary of life insurance proceeds may decide to either _________ the death proceeds or deposit the proceeds in an interest bearing account, drawing the ________ only and retaining the capital in the account
buy sell value premium
Cross purchase ___/____ agreements help with the orderly continuation of a business in the event that an owner dies prematurely. Based on legal contracts that set a _____ on each persons portion of ownership the proceeds allow another individual to purcha
group inexpensive 10 31
_____ life insurance is the most __________ type of life insurance, since its usually sold to employer groups on a payroll deduction plan. minimum of __ people and the grace period is __ days
whole permanent maturity cannot
A _____ life, sometimes called cash value life insurance is considered to be permanent. It covers you until you die or until the policy reaches _______ which is normally age 100. A whole life policy ______ be changed with out the client's consent and it n
term cash time expire
____ Insurance is considered to be temporary. It is the most inexpensive at issue, over the long run cost could be higher since there is no ____ value. A policy is written for a specific period of ____ and when it is over the policy will _______. Most are
predetermined retirement
Endowment Policies that are similar to whole life, except they mature at a _____________ age that is selected by the client upon purchase. If the client lives to that age then the policy will pay the client its face (and now cash) value and that can be us
30 policy premium
All types of ordinary life insurance have a grace period of at least __ days, during which time the coverage remains. If you die in the grace period, the insurance company will pay the face amount of the _____, but it will subtract the overdue _______ fro
industrial service weekly 28
_________ (home _______) Life policies were very popular in the 30s & 40s and were sold by "debit" producers who called on clients once a week. Since the premiums were paid ______ the grace period is __ days. Most had face amounts of $1,000 or less and di
nonparticipating dividends policyholders
_________________ policies: stock companies issue these policies meaning that company profits may be returned to stockholders in the form of _________. The ______________ are not entitled to share in company profits. (dividends paid are considered to be o
participating policyholders not
_______________ Policies: mutual companies do not have stock. They are corporations but they are owned by _____________ If the BOD declares a dividend it is paid to the policyholders. The IRS has ruled these dividends are a return of premium and are ___ t
fixed rate general insurer
______ insurance products, like whole life, have a fixed guaranteed ____ of return. Cash values are invested in the insurer's ______ account in a conservative fashion, since the _______ bears the investment risk
variable not cash separate insured
_________ insurance products do ___ have a guaranteed rate of return nor do they have a guaranteed ____ value. The cash value is invested in the insurer's _________ account and since there are no guarantees the _______ bears the investment risk
equals plus minus
Gross Annual premium ______ cost of death ____ expenses _____ interest
net single
___ _______ premium is an initial participating life insurance policy premium minus policy dividends with the insured applies the dividends to pay part of the premium
Premium Payment Mode
The method and frequency with which a premium is paid to the insurer is called the ________ ________ _____. this is how often the premium is paid- monthly, quarterly, semi-annually or annually
not life guaranty
When selling life insurance, producers may ___ refer to the ____ and Disability Insurance ________ Fund.
buyers policy premium request
Insurers shall provide to all prospective life insurance purchasers, a ______ guide and a ______ summary prior to accepting the applicant's initial premium. Both also must be provided to any prospective purchaser upon _______.
net cost cash
Interest-adjusted ___ ____ Method (Life Insurance Surrender Cost Index) Use this to depict the true cost of life insurance if your client plans on taking a ____ surrender at some future point
interest rate death
Comparative _______ _____ Method (Life Insurance Net Payment Cost Index) use this to depict the true cost of life insurance if your clients main concern is the benefits to be paid at _____. not planning on taking a surrender
small large
Regardless of the index used, its important to know that the policy with a _____ index number is generally a better buy than the comparable policy with a ____ index number
contract
Under the entire ________ clause, the application is combined with the policy to form a legally enforceable contract.
main producer
The application is the underwriter's ____ source of information. The last part called the ______'s report contains information regarding the producers personal knowledge of the applicants
insurance information credit reporting
If the underwriter is going to order an investigative report from an independent investigating firm, the applicant must be given the Notice Regarding __________ ____________ Practices as required by the federal Fair ______ _________ Act
insured applicant producer
What three people must sign a application?
premium
The Producer is responsible for collecting the ________ at the time of the application signing.
not written
Once completed, the producer may ___ change anything on the application without the _______ consent of the applicant
conditional
The producer usually gives a __________ receipt which makes the coverage effective on the date of application if the company finds the applicant to be insurable on that date (never given unless you have the premium)
binding
Some companies use a _______ receipt, which always make coverage effective on the date of application. (temporary term of coverage)
6
Companies will allow producers to backdate coverage up to _ months to help the applicant obtain a younger original age
replacement proposal
If the policy is replacing a current policy the producer must give the applicant a Notice Regarding ___________ and a Policy __________ or Outline of Coverage
twisting
Convincing a client to replace coverage to his/her detriment is called ________
free look 10
Whether the policy is delivered or mailed, most policies contain a _____ ____ clause that starts at the time of deliver or the date of mailing. Client can return the policy within __ days for a full refund of all money paid for no reason
AIDS HIV
Most states have made efforts to pass legislation addressing non discrimination of ____ or ___
no one applicant
__ ___ may require the performance of an HIV related test without first receiving specific WRITTEN consent from the _________
blind
People who are _____ may not be unfairly discriminated against in any manner and shall NOT be considered to have a different life expectancy
loss ratio
A ____ ______ is determined by dividing losses by total premiums recieved. If a particular producer's loss ratio is hight than company average it may be that the producer is failing as a front line underwriter
policy surcharge exclusion reject
Underwriters have four choices when dealing with insurance applications: Issue the ______, Issue the policy with a ________, Issue the policy with an __________ or ______ the application entirely
standard
The ________ risk is the average risk with no special health problems and no dangerous hobbies or occupation
preferred
The _________ risk is a client that does not smoke and who keeps fit by regular exercise, many companies will offer special policies to this kind of risk
rated up
A sub standard risk can be _____ __ age: this plan assumes the applicant is older than they really are, for instance a 30 yr old is charged as a 40 yr old
flat additional
A sub standard risk can be added a ____ __________ premium is an additional premium added to the standard rate
Tabular
A sub standard risk can be charged a _______ rating: here the company actuary determines what the exact surcharge should be for a client with a particular impairment based on historical claims
Graded death
A sub standard risk can be given a ________ _____ benefit: this is when the company charges a client for a $100,000 face amount but writes the policy for $75,000 and after a period of time the company can gradually increase the coverage to the $100,000
standard
Most applicants for life insurance are able to purchase insurance at the ________ rates.
renewable
Annual __________ term: is a policy in which the face amount stays level but as the insured gets older the premium increases
premium
Level _______ Term: When both the premium and face amount stay level for a period of time (5yrs, 10yrs) but when they renew it the premium would increase substantially
re entry
A common feature on many term policies is the __ ______ Option, this gives the insured the opportunity to pass a physical exam at the end of the term in order to qualify to renew the policy at a lower premium than the guaranteed rate (if he fails he still
Decreasing
___________ Term: Is a policy where the premium stays the same each year but the amount of coverage decreases (usually on a straight line basis)
Convertible
__________ Term: You are able to convert a level or decreasing term policy to a whole life policy at any time without a physical exam. conversions are done at the clients "attained" age, premiums increase because whole life is more expensive
continuous
_________ Premium (straight life): Premium payments are based upon client's original age and cannot be change. Accumulates cash after the 3rd year, matures at age 100, LEAST EXPENSIVE PERMANENT Insurance
limited single
_______ Payment and _______ Premium: The premium is paid over a shorter term and has immediate cash value for whole life insurance
paid up 65
Life ____ ___ at __ (LP65): Policy requires the client to pay all of his premiums by age 65, so the premiums are higher than traditional whole life but the client doesn't have to pay until 100 like in continuous premium
premium
Single _______ Life- THis policy is fully paid up by paying a single premium at the policy inception, has immediate cash value
graded
Modified Premium (_______ Premium) Whole Life- Many insurers offer premium discounts during the early years to make it easier to sell
modified reduced
________ Premium- Initial level premiums are substantially lower than straight whole life. The insured would pay ________ premiums for a specified period of time, then the premiums would increase to a level higher than the whole life. (face amount stays s
graded
A ________ Premium whole life policy starts out lower but then the premiums increase gradually each year for 5 years (specified time) until they would then remain level, face amount stays same
predetermined
Endowment policies are the same as whole life except the maturity occurs at a ______________ time selected by the insured
dividends
Enhanced Ordinary Life- This is a type of insurance rider which uses _________ to buy additional paid-up insurance
adjustable
_____________ Whole Life Insurance- This policy is marketed to meet the insured's changing need and ability to pay premiums in an uncertain economic climate (can change face amount, premium payments, period of protection without underwriting)
Universal
___________ Life- adjustable benefit life insurance contract that accumulates cash values and has a flexible premium (can increase the death benefit without buying another policy- may have to prove insurability)
joint life
_____ ____ (First-to-Die) Policies- Whole Life contracts written with two or more persons named insured. Policy will be payable on the death of the first insured to die
Last
____ Survivor- Pays the insured amount when the last person dies- often used to pay estate taxes after the second spouse dies
Juvenile
_________ life insurance is written on the life of a minor, one time is called Jumping Juvenile because it automatically increases at a given age (21)
Endowment
Juvenile _________- are written on a child at a very young age, usually the endowment period is to age 18 (or 21) to pay for college
10 without employer benefit claims 75 salary
Characteristics of Group Plans
1. Minimum of __ People
2. Coverage ________ a physical
3. Policy is issued to an ________, trust, association or union
4. Coverage written to ________ the employee and their dependents
5. Premiums are based on the past ____
employees debtors trusts
The following groups are authorized for Group Life Insurance: ________, _______ and Multiple Employer _______
dependent 31 non 31 2 amount conditions 31 covered entitled
Group Life Standard Provisions:
1. Coverage for a _________ spouse or child may be offered at the discretion of the employer
2. Dependent's coverage has the same rights of conversion (__ days)
3. If a group life policy is other than term, it shall have a
Credit Life
______ ____ Insurance- a type of decreasing term insurance written on the life of a debtor. Coverage cannot exceed the life of the loan and the policy limit cannot exceed the amount owed (proceeds go to the creditor to pay off the debt)