A.d. Banker Life & Health Test Questions

Manufacture and sell insurance coverage in the form of insurance policies or contracts of insurance.

Are captive or independent organizations that recruit, contract with, train, and support insurance producers.

Are licensed individuals representing and appointed by an insurance company when transacting insurance business

The person or entity that is covered by the insurer, which covers losses due to loss of life, health, property, or liability.

Is not necessarily the insured under the policy but is responsible for paying the policy's premium and has various rights as specified in the contract

Last resort private coverage for businesses and individuals who have been rejected by the voluntary market.

Requires insurers writing specific coverage lines in a given state to assume their share of profits/losses of the total voluntary market premiums written in that state

Insurers agree to apportion among themselves those risks that are unable to obtain insurance through normal channels

Insurance companies that operate to accept all or a portion of the financial risk of loss from the primary (or ceding) insurance company. The risk of loss is transferred to one or more insurance companies. Consumers have no direct contact with these companies.

To sell part or to cede part of a risk to another insurance company

Reinsurance agreement that automatically accepts all new risks presented by the ceding insurer

Reinsurance agreement that allows the reinsurance company an opportunity to reject coverage for individual risks, or price them higher due to their substandard (higher risk) nature.

If an insurance company wants to transfer all or part of the risk it has accepted, it would buy which of the following types of insurance?

1. Residual

2. Reinsurance

3. Reciprocal

4. Insurer

An insurer incorporated in New York would be considered domestic in what state(s)

Authorized by this State's Commissioner of insurance to do business in this state. It has received a Certificate of Authority to do business in this state.

Has either applied for authorization to do business in this State and was declined or they have not applied. They are not authorized to transact insurance in this State

What type of insurance can be placed through non-admitted carriers?

Type of insurance that finds coverage when insurance cannot be obtained from admitted insurers. However, it cannot be utilized solely to receive lower cost coverage than would be available from an admitted carrier.

Which of the following is an insurance company that is organized under the laws of another state within the united states?

1. Domestic

2. Alien

3. Foreign

4. Authorized

Oversees the operation of the business

Gather and interpret statistical information used in rate making. Determines the probability of loss and sets premium rates.

Responsible for the selection of risks (person or property to insure) and rating that determines actual policy premium.

Responsible for advertising and selling

Assists the policyholder, insured, or beneficiary in the event of a loss and processes, and pays the amount of the claim in a timely manner based upon the contractual provisions and amount insured.

Which insurance dept. accepts the insurance risk?

What is the main purpose of the Dept. of Insurance?

Regulates all insurers doing business in this state. Protection against insolvency of an insurer is its major concern

Which of the following individuals represents the insurance company when selling an insurance policy?

1. Producer

2. Broker

3. Adjuster

4. Insurer

Authority that is written into the producer's contract. May be expressed orally or in writing.

Authority the public assumes the producer has.

Authority created when the producer exceeds the authority expressed int he agency contract.

Producer's responsibilities to the insurer are:

Which of the following types of authority does the public assume an agent has when quoting insurance?

1. Authorized

2. Express

3. Implied

4. Apparent

A producer has each of the following responsibilities to the insurer, except:

1. A fiduciary duty

2. Forwarding premiums to the insurer on a timely basis

3. Reporting material facts that may affect underwriting

4. A duty to recommend only high rate policies

Always represent the insurance company

Always represents the insured's

Offer advice, counsel, and opinions of service in respect to the benefits, and the advantages or disadvantages of any insurance policy or contract. Compensated by a fee for service, are not bank trust officers.

Another name for the insurance company

Anyone trusted to handle other people's money or items of value (Agents, Executors, Pension trustees, etc.)

Protects consumer privacy and protects the public from overly intrusive information collection practices.

Credit reporting agency must reinvestigate within ____ months, if applicant challenges accuracy.

Agencies must forward to applicant inaccurate information given out within previous ___ year(s)

Report must not include lawsuits over _____year(s) old or bankruptcies more than _____year(s) old

Examples of "Red Flags" concerning Money laundering, described under the Patriot Act, include:

Failure of Agents/Brokers to report any activity they believe or even have reason to suspect is an effort to launder money, can result in:

A fraudulent act involves

State fraudulent insurance acts protect:

This repealed parts of the Glass-Steagall Act of 1933 to allow the merger of banks, securities companies, and insurance companies. It also established the Financial Privacy Rule and Safeguards Rule for the protection of consumers' privacy.

The Privacy notice must explain:

This is the largest crime bill in U.S. history, and expands funding to federal agencies such as the FBI, DEA, and INS and includes provisions that address domestic abuse and firearms, gang crimes, immigration, registration of sexually violent offenders, victims of crime, and fraud.

If consent is granted by any state, other states must allow the applicant to work in their states as well. This is known as

A condition where the chance, likelihood, probability or potential for loss exists

Situations where there is a chance for loss, gain, or neither. Examples: Gambling, investing, starting a new business. These risks cannot be insured

Situations where there is no chance for gain; the only outcome is for nothing to occur or for a loss to occur. This risk can be insured.

Reduction, decrease, or disappearance of value. Is the basis of a claim under the terms of an insurance policy.

The cause or source of a loss (fire, windstorm, embezzlement)

A specific condition that increases the probability, likelihood, or severity of a loss from a peril

Flammable material stored near a furnace would be an example of what type of hazard

An insured burns down his/her own house to collect the insurance payout. This is an example of what type of hazard

Driving too fast for conditions, not wearing a seat belt, ignoring stop signs at familiar intersections are all what type of hazard

Dishonest tendencies that increase the probability of loss are what type of hazard?

The condition of being at risk of loss. Simply by existing, property and people are subject to many different risks.

An imbalance created when risks that are more prone to losses than the average risk are the only risks seeking insurance within a specific marketplace. Example: only those living in earthquake-prone areas seek to buy earthquake insurance.

Five ways of managing risk:

Insurable risks must include:

A legal contract purchased to indemnify the insured against a loss, damage, or liability arising from an unexpected event.

The ability of an applicant to meet an insurer's underwriting requirements.

The process of selecting, classifying, and rating a risk for the purpose of issuing or not issuing insurance coverage

An event, past or present, which may cause loss or damage, or create legal liability on the part of an insured.

In Life and Health policies, Insurable interest must exist at what time?

What principal of insurance restores the insured to the same economic condition that existed before the loss?

Pertains to the formation and enforcement of contracts

Civil wrongs; not breaches of contract. They result in the injuries or harm that constitute the basis of a claim by a third party.

A contractual agreement that transfers the liability of one party to another party; it is used by landlords, contractors, and others as a way to avoid or reduce risk.

What a reasonable and prudent policy owner would expect; the reasonable expectations of policyowners are honored by the courts although the strict terms of the policy may not support these expectations.

Four elements of a legal contract are

Pays a specified dollar amount for a loss. Example: a hospital policy may pay $100 per day as stated in the policy

A written contract may not be altered without the written consent of both parties.

A contract that pays a stated amount in the event o f a loss. Example: A life insurance policy

Occurs when a claim is paid by the insurer who then acquires the right to take legal action against any negligent third party who may have caused the loss.

One party writes the contract, without the input from the other party. "take-it-or-leave-it" basis. Any doubt or ambiguity found in the document is construed in favor of the party that did not write it (insured).

The exchange of value is unequal.

Owner cannot transfer or assign ownership of an insurance policy (property & casualty) to another person

Only one party is legally bound tot he contractual obligations after the premium is paid to the insurer.

Both parties must perform certain duties and follow rules of conduct to make the contract enforceable

The two parties rely upon the statements and promises of the other and assume no attempt to conceal or deceive has been made.

Statements made by the applicant on the application are considered _______ and not warranties. They are believed to be true to the best of the knowledge and belief of the applicant at the time of application.

A false statement contained in the application; usually does not void coverage or the policy, if it is immaterial.

Statements in the application or stipulations in the policy that are guaranteed true in all respects.

The willful holding back or secretion of material facts pertinent to the issuance of insurance.

Intentional deception of the truth in order to induce another to part with something of value or to surrender a legal right.

Voluntary surrender of a known right, claim or privilege; example: insurer's failure to obtain an answer to an unanswered question in its application for insurance prior to issuing the policy, thus waiving right to contest a claim based on the information it failed to obtain.

Judicial denial of a contractual right based on prior actions contrary to what the contract requires.

Underwriting factors include:

The dollar amount charged for a particular unit of insurance, such as $5 per $1000 insurance.

The total cost for the amount of insurance purchased.

A person making application for himself/herself or another to be insured under an insurance contract. May be the insured, owner or both.

A document that is used to collect information provided by the applicant/insured for underwriting purposes. After the policy is issued, any unanswered questions are considered waived by the insurer.

One or more "persons" named in the policy to receive the policy's benefits if the insured dies while the contract is in force.

The relationship that must exist between the applicant and the insured, at the time of application and policy issuance, in order for the contract to be valid.

The individual who has the ownership rights in a policy.

Any changes made to a policy must be approved by _________ in writing with his/her signature

Prossessing a license solely for the purpose of writing business on one's own self, immediate family, relatives, employer, and employees.

A policy owned by a person other than the insured.

Insured's age on the policy issue date

Insured's age at any point in time typically used at renewal or conversion

The date when insurance coverage begins

The date in which insurance coverage ends

It spreads out the result of financial loss caused by death among many persons, so the cost for each individual is small

All of the following are examples of a third-party ownership, Except:

1. J is named as the owner and beneficiary of G's policy

2. S applies for a policy on herself and names her husband as the beneficiary

3. T applies for and owns his 2-year old son's policy, but names his wife beneficiary

4. J applies for his life insurance policy and names his trust as the owner and beneficiary

A business owner buys a life policy on his own life. He may be all of the following except:

1. Owner

2. Applicant

3. Beneficiary

4. Insured

Regarding Advertising, Producers are governed under the rules and regulations referred to as ________________ with regard to what they can and cannot use or say when soliciting insurance.

Companies must update their "Do not call registry" at least once every _____

Telephone solicitation calls to your home before ___ and after ___ are prohibited.

What must be done when a telephone solicitation call to you home is made?

Producers are required to provide all prospective buyers the following:

A generic brochure developed by the NAIC to assist prospective buyers of life insurance. Descriptions of all basic types of life insurance as well as comparative costs of each are offered.

What does the Policy summary normally consist of?

The act of saving or keeping an existing policy and preventing it from being replaced

Producer's responsibilities regarding Policy replacement include:

Regarding Policy replacement, the replacing insurer's responsibilities include:

Regarding Policy replacement, the insurer responsible for issuing the new policy is known as?

Regarding Policy replacement, the insurer who issued the policy to be replaced is known as?

Who must sign the application

Whenever an answer to a question needs to be corrected on an application, the insurer may require?

The Producer's primary underwriting role is

If a premium is paid, coverage will be in effect the date of application or completion of the medical exam, whichever is later, If the policy would have been issued as applied for, unless it is declined within a stipulated period of time.

If premium is paid, coverage will begin immediately for a specific length of time regardless of whether the applicant is ultimately approved by the insurer.

The coverage becomes effective at application approval. If the company doesn't approve the application, coverage was never in effect.

The date when insurance coverage begins

An application submitted without a premium. The policy would not take effect until the policy is issued by the insurer, delivered by the agent and the premium is paid.

Who is required to sign a completed application:

1. The producer

2. The beneficiary

3. Any insurance company officer

4. The producer's manager

An applicant for life insurance realizes several days later that she may have answered a question about a health issue incorrectly. What should she do?

True or False:

Insurance companies may refuse to issue a policy to individuals based on positive HIV test results

Insurance covering the liability of a producer or agency, typically written with a deductible to control the number of claim occurrences, which, in turn, reduces the frequency. Claims are filed due to client reports (complaints) and for a number of reasons.

Two common complaints covered by Errors and Omissions insurance are:

Failing to obtain proper type or amount of coverage for a client

Quoting inflated information or misrepresenting a plan of coverage neglecting the effect the information might have on the client at a later date. Is an example of:

Information from a third party collected by the insurance company in the application for insurance and during underwriting of the policy may be subject to the jurisdiction of the

The process of selection, classification, and rating, determining if someone is insurable, classifying the risk, and determining the rate or premium to be charged.

Sources of underwriting include:

The application consists of what two parts

Conducted by physicians or nurses who provide results of an examination and information regarding the applicant's present health

Used in cases in which the individual application and/or medical reports reveal conditions of which more information is required.

What is the primary purpose of the Medical Information Bureau (MIB)

These services "alert" underwriters to errors, omissions or misrepresentations made on insurance applications, and may help lower the cost of life and health insurance for consumers.

A general report of the applicant's finances, character, morals, work, hobbies, and other habits. Can be completed by the insurer or a third party provider. Applicant must be made aware of any information gathering and has rights provided under FCRA

A personal statement submitted by the producer to insurer regarding applicant's financial condition, any personal knowledge of the applicant, etc. The information remains confidential between the producer and the insurer, and it does not become part of the entire contract.

It is ultimately who's responsibility to determine if individuals meet all the underwriting requirements set forth by the insurer.

A policy requested when the applicant's age, medical history or amount of coverage does not require a medical examination for underwriting. Health questions are asked by the producer and are the only medical information required.

Upon receipt of the necessary information, such as the application, medical exam, blood and urine test results, etc., the home office underwriters analyze the information and determine if the applicant is an acceptable risk.

Individuals who bear the same health, habits, sex/gender, and occupational characteristics as those reflected in the mortality table (average life expectancy)

Individuals who meet certain requirements and qualify for lower premiums, such as ideal health, height and weight

Individuals who are not acceptable at standard rates because of bad health, bad habits, at risk hobbies or at risk occupations and are issued "rated policies"

Examples of "rated Policies" are:

Initially, only the premium would be refunded in case of death. The death benefit increases over time with the full face amount eventually payable. This is generally used with Senior life insurance plans to provide minimal benefits without a medical examination.

Rates an insured at older than actual age

A constant dollar amount added to the standard rate per $1000 of coverage.

Classified to the extent of impairment according to the tables used.

A decision that the risk is one for which the insurer refuses to issue insurance. In this case the applicant is deemed uninsurable.

A person trained in the technical aspects of insurance and related fields, particularly in mathematics and probabilities. Determines the probability of loss and sets the premium rates for the insurer.

When calculating premium rates, life insurers assume that all:

Premiums are based on:

Interest earned on premiums assist in

Mortality tables are used to

The rate developed from studying and interpreting statistics developed from the deaths of millions over long periods of time.

The amount charged to cover each policy's share of expenses of operation is called

The process of calculating Net Premium rate requires

Additional charges are added to the net premium rate to enable an insurer to meet all costs under the contract, such as operating expenses, commissions, medical examination costs, etc. This is called

When reviewing an application, the underwriter may find it necessary to reclassify the risk. How might this effect the premium

The net premiums paid plus interest earned; reflect possible contract obligations. An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. Usually treated as a liability.

Mortality cost formula

Which of these modes would result in the insured paying the least annual outlay for life insurance?

1. Annual

2. Payroll deduction

3. Automatic monthly bank draft

4. Monthly

Policy delivery will be accomplished by:

Providing funds for surviving spouses and dependents

Providing large sums of money for dependents and beneficiaries

Provides money to pay any estate taxes or loans which must be satisfied upon the death of the estate owner, (the insured) preserving the insured's estate

An amount of cash accessible to the policyowner from within permanent life insurance policies

Immediate funds available upon death to pay creditors, taxes and final expenses as well as cash values available for policy loans, withdrawals, and full surrenders

A type of coverage with a small face amount, typically purchased to pay the burial expenses of the insured.

To help fund favorite charitable organizations upon the insured's death

Properly owned and properly named beneficiaries will allow for payment of death benefits directly to the beneficiaries, bypassing the probate process

Peace of mind knowing that future insurability is not an issue and benefits will be in place so long as the required premiums are paid

If the policy was purchased prior to creditor issues, the policy's values are normally exempt from any creditor claims.

A terminally ill insured/owner selling his/her policy to a third party for less than the death benefit but more than the cash values in order to obtain funds when no other sources are readily available.

Personal uses of life insurance may be said to do which of the following?

1. Creates an insurable interest

2. Creates an immediate estate

3. Provides protection against living too long

4. Compensates a business for a death of a key person

These terms describe investors, producers, or brokers with absolutely no personal or business connection with a person, who induce a purchase of a life insurance policy with the sole intent of selling that policy to institutional investors for an amount less than the death benefit but greater than the policy's cash value.

This approach is a measure of the projected future earnings and services of a person at risk in the event of a premature death.

Human Life Value Approach uses what factors?

Determines a need for coverage upon the premature death of an individual. Always assumes the death of the individual to be immediate.

Needs Analysis Approach takes what factors into consideration to determine proper coverage amount needed

Assumes both principal and interest are liquidated over the relevant time period to provide the required income for the dependents

Assumes the desired income will be generated by the investment earnings only, thus retaining or conserving the principal or capital investment

When determining an appropriate amount of life insurance, a producer takes into consideration the existing mortgage and other debt, future education expenses for the client's children and continuing income for his surviving spouse. This approach is known as:

An insurance plan normally owned by an employer, creditor or association, under which coverage is provided for the employees, debtors or members. Makes up over 40% of all life insurance policies.

The grace period for group insurance is ____ days

May be of any classification or type of insurance. May also build or preserve an estate or provide a living benefit for the terminally ill.

Any type of life insurance that is not group, industrial or government insurance.

Synonymous with debit life insurance and makes up only about .03% of the life insurance today. Small policies, normally $350 to $1000, were originally sold to pay funeral expenses.

A life insurance policy that remains in force to age 100 or beyond, and does not require to be renewed. Provides living benefits for the policyowner or insured by way of its cash values.

Lowest of premium outlay and designed for someone with a large insurance need but with limited cash flow. Written to cover a short period of time. Does not build cash value.

A class of policy marketed by a mutually owned company. Dividends may be paid to the policyowner when they are declared by the board of directors.

A policy marketed by a stock insurer.

The policy has a fixed amount of coverage, benefits and premium. Without riders, future inflationary trends will cause the purchasing power of the policy's' benefits to be reduced

These policies assist the insured during inflationary periods with the changing needs of the policyowner and insured.

A policy introduced in the 1970's that uses separate accounts for the cash value accumulation. A security license is required to sell this policy

Characteristics unique to Variable Stock market products:

The maturity date or time at which the policy's cash value equals the face amount and the proceeds are paid to the policyowner.

The death benefit amount payable on a life insurance policy. In other words, the amount of coverage the policy provides. Sometimes referred to as limit of liability

Money accumulated in a permanent policy which the policyowner may borrow as a policy loan or receive if the policy is surrendered before it matures.

An added benefit attached to the policy that modifies existing coverage. Usually added at the time of application and typically requires an increase in premium

When a whole life policy endows, what happens to the policy cash value?

What is the face amount of insurance

Temporary life insurance for a specified period of time.

1. Cash surrender value

2. Low cost

3. Limited duration

4. Pure protection

The death benefit remains level and the premiums remain level during the policy term.

The death benefit decreases, but premiums usually remain level for the policy term; often utilized to pay off outstanding mortgage balances. If the insured dies the proceeds of the policy can be used to pay off the mortgage.

A special form of decreasing term. Unlike the standard decreasing term policy, this insurance automatically names the creditor as the beneficiary. The policy cannot be written for more than the outstanding debt, since that is the limit of the creditor's insurable interest. Once the loan is paid, the policy ends.

Although credit life insurance (term) can be obtained as an individual, how is it usually sold?

Debts generally covered in a Credit life insurance policy include:

The death benefit increases over the life of the policy while the premiums remain level. This type of term is normally written as a rider for the return of premium on a permanent policy over a set number of years.

An existing term life insurance policy may be exchanged typically one timer for a new life policy on

The simplest form of term life insurance is for a term of

What are the characteristics of an Annually renewable term

A life insurance policy that undergoes a simplified underwriting process that does not require a medical exam to issue.

A "level term" policy means that the _______ remains the same throughout the lifetime of the policy, including any renewal periods.

Policy proceeds are also known as

In _____ _____, at each renewal the premium will increase based on the age of the insured.

The ____ ____ of insurance is gross premium minus the insurer's expenses and profit and without adjustment for interest earnings on reserves.

A benefit that will renew the contract on the renewal date without evidence of insurability.

Characteristics of Renewable contract

Renewability is important because the risk is

The right to convert the existing term policy to a permanent policy without evidence of insurability during the conversion period specified in the contract.

Why are premiums higher when a policy is converted from a Term to Permanent policy?

Group life is usually written as Term and is both _____ and ____.

The greatest advantages of term insurance are

Whole life insurance is permanent protection that mutures at the insured's age of

When does a policy mature

The grace period for late premiums is typically

If premiums have not been paid during the grace period, the policy will..

The policy conditions represent the obligations of?

A life insurance policy is a unilateral contract because?

Applicant does not provide honest disclosure on the application as required in the contract and the agent also does not describe the terms of the contract fully. Which doctrine applies?

True of false:

Social insurance provides equal benefits to all citizens that contribute.

If an insurance agency has a salaried agent that sells insurance policies, this type of agency would be considered a/an:

Factors that can affect premiums for life insurance policies can include?

A written statement or oral statement which is false

Insurance coverages that cannot be obtained from any authorized insurers in a state, may be purchased from?

A company owned by stockholders that does not pay dividends to policyholders is considered

The fair credit reporting act guarantees

If a policy is written with unclear definitions, conditions and provisions which are hidden in the contract, and the insured files a law suit. In the court of law, the contract would be construed in favor of the insured because it is a

The date when insurance coverage begins

A application submitted without a premium, where the policy would not take effect until the policy is issued by the insurer, delivered by the agent, and premium is paid, is known as

Parts of a life insurance application

Used in cases in which the individual application and/or medical reports reveal conditions of which more information is required. Written release is required by applicant.

General report of applicant's finances, character, morals, work hobbies, and other habits.

A policy requested when the applicant's age, medical history, or amount of coverage does not require a medical examination for underwriting.

What are the classifications of risk

Individuals bear the same health, habits, sex/gender, and occupational characteristics as those reflected in the mortality table

Individuals who meet certain requirements and qualify for lower premiums, such as ideal weight, health, and height.

Higher risk exposure. Not acceptable at standard rates because of bad health.

Types of substandard risk rates

Initially, only premium would be refunded in cases of death. Benefit increases over time with the full face amount eventually payable

Rates an insured at older than actual age

A constant dollar amount added to the standard rate per $1000 of coverage.

Classified to the extent of impairment according to the tables used

Factors in Premium determination

Life expectancy rates

Takes into account interest and mortality factors only

Additional charges are added to the net premium rate to enable the insurer to meet all costs under the contract.

An amount representing the actual or potential liabilities kept by an insurer to cover debts to policyholders. Treated as a liability

Mortality cost formula

What basis are premiums calculated on?

The more frequently the premiums are paid the ________ __________ the mode of payment

Provides funds for surviving spouses and dependents

Proved money to pay any estate taxes or loans which must be satisfied upon the death of the estate owner

Providing large sums of money for dependents and beneficiaries

An amount of cash accessible to the policyowner from within permanent life insurance policies.

Immediate funds available upon death to pay creditors, taxes and final expenses as well as cash values available for policy loans, withdrawals, and full surrenders

A type of coverage with a small face amount, typically purchased to pay the burial expenses of the insured.

A terminally ill insured/owner selling his/her policy to a third party for less than the death benefit but more than the cash values in order to obtain funds when no other sources are readily available

Investors, producers, or brokers with no personal or business connections with a person, who induce a purchase of life insurance policy with the sole intent of selling that policy to institutional investors for an amount less than the death benefit but greater than the policy's cash value.

Personal uses of life insurance may be said to

This approach is a measure of the projected future earnings and services of a person at risk in the event of premature death.

Factors used in Human Life approach

This approach determines a need for coverage upon the premature death of an individual. Always assumes the death of individual to be immediate and factors itemized list of items into arriving at the proper amount.

When considering an appropriate amount of life insurance, a producer takes into consideration the existing mortgage and other debt, future education expenses for the client's children and continuing income for his surviving spouse. This approach is known as?

An insurance plan normally owned by an employer, creditor or association, under which coverage is provided for employees, debtors or members.

Over _____ % of life insurance in force int he U.S. is group insurance

Group coverage is normally written on a ____ _____ basis providing no cash value or living benefits as found in individual cash value policies.

Upon retirement, group coverage can be converted to an ________ ______ life insurance plan without having to prove insurability.

In group plans, ____% participation is required if employees are required to participate in sharing premiums.

In group plans, ____% participation is required if the employer pays the entire premium

Grace period for group insurance is

Premiums for group insurance are based on

This Insurance type may be of any classification or type of insurance. May build or preserve an estate or provide a living benefit for the terminally ill, and leave the decision of keeping the policy up to the policyowner.

Any type of life insurance that is not group, industrial or government insurance.

Synonymous with debt life insurance and makes up only about .03% of the life insurance today. Normally $250-$1000, originally sold to pay funeral expenses.

A life insurance policy that remains in force to age 100 or beyond, does not require renewal, premium is always higher than term policy at issuance, provides living benefits for policyowener or insured by way of cash values.

Lowest of premium outlay and design for someone with a large insurance need but limited cash flow. Written to cover a short period of time, does not build cash value. Typically used to cover Mortgages, short term obligations, or for younger couples with one or more children

A class of policy marketed by a mutually owned company. Dividends may be paid.

A policy marketed by a stock insurer.

This policy has a fixed amount of coverage, benefits and premium.

These policies assist the insured during inflationary periods with the changing needs of the policyowner and insured.

A policy introduced in 1970 that uses separate accounts for the cash value accumulation. Securities license is required to sell this policy. Policyowner takes the investment risk of the policy. There is no guarantee of return and down markets can cause significant loss of policy value.

Unique characteristics of Variable stock market products are:

A single policy issued to a business to cover the lives of employees is what type of insurance

If premium is paid, coverage will be in effect the date of application or completion of the medical exam, whichever is later, if the policy would have been issued as applied for, unless it is declined within a stipulated period of time

If premium is paid, coverage will begin immediately for a specific length of time regardless of whether the applicant is ultimately approved by the insurer.

This coverage becomes effective at application approval. If company doesn't approve the application, coverage was never in effect.

The maturity date or time at which the policy's cash value equals the face amount and the proceeds are paid to the policyholder

The death benefit amount payable on the life insurance policy. The amount of coverage the policy provides

Money accumulated in a permanent policy which the policyowner may borrow as a policy loan or receive if the policy is surrendered before it matures.

An added benefit attached to the policy that modifies existing coverage. A rider is usually added at the time of application and typically requires an increase in premium

When a whole life policy endows, what happens to the policy cash value?

What is the face amount of insurance

Temporary life insurance for a specified period of time that does not have a cash value.

Would rates be higher for a 10 year level term, or a 5 year level term?

What are the characteristics of Level term insurance.

What are the characteristics of Decreasing life term life insurance

What are two examples of decreasing life insurance

What are the characteristics of Increasing term insurance

An existing term life policy may be exchanged typically one time for a new term life policy on this date.

How are premiums based on Re-Entry term insurance

What are the characteristics of Annually Renewable term insurance?

The life insurance policy that undergoes a simplified underwriting process that does not require a medical exam to issue.

A benefit that will renew the contract on the renewal date without evidence of insurability.

The right to convert the existing term policy to a permanent policy without evidence of insurability during a specified period in the contract.

Group life insurance is typically written as?

The greatest advantages of term insurance are?

A level term policy means that the ________ remains the same throughout the lifetime of the policy, including any renewal periods.

Permanent protection that matures at the insured's age of 100.

What are the characteristics of Interest sensitive- current assumption whole life insurance

What are the characteristics of Universal life insurance

How is the cash value account calculated in universal life insurance

What are the characteristics of Variable whole life insurance?

Characteristics of Variable universal life insurance

What is a Jumping juvenile policy

What are the characteristics of Joint life: first to die

Characteristics of Joint survivorship life: last to die

Waiver of premium rider characteristics

Waiver of Payor's premium (payor benefit) rider

Disability income riders

Waiver of cost of insurance rider

Term riders

Accidental death benefit rider

Accidental death and dismemberment rider

Guaranteed insurability

Return of premium rider

Return of cash value

Cost of living rider

Living need rider

Long term care rider

Characteristics of whole life insurance

Straight whole life

Limited pay whole life

Single premium whole life

Characteristics of Adj. life policies

Benefits provided in the policy as part of the contract without an additional charge

Provisions that provide choices which must be specified by the policyowner

Entire contract clause

Incontestability clause

Insuring clause

Consideration clause

Privilege of change clause

Suicide clause

Ownership provision

Assignment provision

Misstatement of age or sex provision

Free look provision

Conditions specifically not covered

Time period after the premium due date before the policy lapses

Automatic premium loan provision

Reinstatement

Cash loans

Revocable beneficiary provision

Irrevocable beneficiary policy

First in line to receive benefits

Receives proceeds if primary beneficiary dies before insured

Third in line to receive benefits if primary and contingent predecease insured

Denies the beneficiary the right to assign his/her interest in the policy proceeds.

(cannot use expected benefits as collateral for loan)

Interest only settlement option

Fixed amount settlement option

Fixed period settlement option

Life income only settlement option

Life income period certain settlement option

Life income joint and survivor

Joint life

Nonforfeiture options

A contract that is designed to protect against outliving retirement income by providing a stream of income to a designated person

The person who is designated to receive the periodic income from the contract.

Annuity income is based on

Single premium immediate annuity layout

Single premium deferred annuity

Flexible premium deferred annuity

Nonforfeiture values

Bailout provision

Annuitization

Life income (pure or straight life) income option

Life income period certain income option

Life income with refund (installment or cash) income option

Fixed annuities

Indexed annuities

Market value adj. annuity

Variable annuity

Uses of annuities

Group insurance must be a _______ group formed for reason other than to purchase insurance at a lower rate.

Premium cost for group markets is determined by

Who is issued the master policy in group insurance

In group insurance, what are employees issued as proof of insurance?

Probationary period

What stipulation is attached to "late enrollee" employees?

Most group insurance is renewable ____________

If an employee is terminated, they have ____ days conversion period without proof of insurability.

Employees who convert insurance from group policies, may convert to

If employees pay a portion of the premium, the plan is a __________ plan, and _____% participation is required

If employers pay premiums entirely, the plan is ___________ plan, and _____% participation is required

Single employer group plan

Prohibits employers from turning funds over to union. Requires separate fund be set up for laborers

Multiple employer trusts (METS)

A Cross- purchase plan

Entity plan

Protects business against losses of a business if a key employee dies.

Three parties involved are Policyowner, insured, and insurer. Policyowner is not insured.

Examples of third party ownership

Characteristics of Social Security insurance

Fully insured

Currently insured requirements

Survivor benefits

Cost recovery rule formula

This compares premiums paid for the policy during the first 7 years with 7 annual net level premiums

Modified endowment contracts

Excess premiums may be returned for payments made into a MEC within _____ days after the end of the contract year

If contract is a Modified Endowment Contract (MEC) all cash value transactions are

Provides that no gain or loss is recognized on certain exchanges between contracts.

Types of 1035 exchanges

During the Accumulation phase of annuities, when is the annuitant taxed on earned interest?

Beneficiary is subject to a taxation of earnings if

Who can contribute to an Individual Retirement Account (IRA)?

What will happen if payments from the IRA account are not started before age 70 1/2?

Premature distributions of IRA before age 59 1/2 will incur

Characteristics of Roth IRA

There is no age limit for contribution period and withdrawals are not required prior to age 70 1/2 for what type of IRA?

Qualified retirement plans have the following characteristic

Savings incentive match plan for employees (simple plan)

Simplified employee pension

KEOGH Self employed plans

401(k)

403(b) tax-sheltered annuities