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45 Cards in this Set
- Front
- Back
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Securities and Exchange Commission (SEC)
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Is responsible for enforcing Federal securities laws, such as the Securities Exchange Act of 1934.
-They are responsible for enforcing Federal securities laws |
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Underwriter Responsibilities |
-categorize applicants -Evaluate Risks -Determine applicants risk |
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Fair Credit Reporting Act |
Federal law that explains to a customer their legal rights when a consumer report will be ordered by an insurer
-That the applicant for insurance be informed that a consumer report may be requested |
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Conditional Receipt
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Is intended to provide coverage on a date earlier than the date of the issuance of the policy
-This means that coverage is conditional upon the applicant meeting all of the underwriting requirements of the company and paying the premium. If the applicant does meet all the conditions, then it is possible that coverage could begin as early as the date of application. |
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Unfair discrimination |
L&H insurers will vary their rates based upon gender, age and/or health. Such discrimination is considered to be fair, since it is based upon verifiable statistical data filed with the Commissioner. However, it would be unfair discrimination to charge different rates for those who present essentially the same hazard. |
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Social Security Benefits |
-Virtually all employed persons are covered -Benefits may include a lump-sum Death benefit and a monthly income to survivors -Benefits are financed through taxes |
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Buy and Sell Agreement |
A plan, usually funded by Life insurance, to purchase a deceased partner's share of a business is known as
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A life insurance policy summary is required to include all of the following information except
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By law, a life insurance policy summary is required to include certain items. The name of the beneficiary is not one of those items required to be included.
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Underwriting department |
It is the underwriting department that determines if an applicant is acceptable to underwrite, and if so, at what premium.
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Rating a policy |
To "rate" or "surcharge" the policy means that the underwriter offers coverage at rates higher than the "standard" or rate published in the producer's manual. It's then up to the applicant to decide if they still want to purchase the policy at the higher price.
Example: If a proposed insured has a hazardous occupation, the insurance company may |
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Life insurance "inspection report"
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also known as an investigative consumer report. It is usually ordered by the underwriter to verify an applicant's credit, character and habits. Inspection reports fall under the provisions of the Federal Fair Credit Reporting Act.
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Executive Bonus plans
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Although the employer pays the premium, the policy belongs to the employee, who may surrender it for cash upon retirement.
-The policy is usually written as level term -The employer owns the policy -The employee pays the premium |
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Binders |
-Utilize binding Receipt, which provides a limited amount of coverage while the application is in underwriting. -Utilize a Conditional Receipt, which states that there is no coverage until all conditions are satisfied -May be oral or written |
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Insurable Intrest |
-Maybe based on love and affection -It may be based off of economics -it may be based upon genetic relationships |
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The Fair Credit Reporting Act
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-The law requires pre-notification of any possible investigation and post-notification if any adverse underwriting action is taken by the company as a result of the information received from a credit bureau. An applicant for insurance also has the right to request a copy of the credit report that the company obtained.
-The reporting agency cannot issue any report containing adverse information about the applicant that predates the report by more than seven years, except in the case of a bankruptcy, which may be reported for a 10-year period. -The applicant has the right to obtain the identity of other inquirers who have obtained consumer reports on them within the past six months from the reporting agency. -The applicant has the right to obtain disclosure of the substance of the information in the consumer report from the reporting agency |
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Mortality Tables |
A life insurance mortality table measures people (10,000,000 individuals) and time, which is the average life expectancies of those people.
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Financial Industry Regulatory Authority |
-They are responsible for making sure that their members follow Federal laws and rules
- is a nonprofit self regulatory organization that is responsible for oversight of its members (broker/dealers and registered representatives). The main objective of FINRA is to self regulate the over-the-counter securities market. |
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Master Policy |
In group insurance the policy owner is usually issued to the employer |
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Annual Renewable Term |
-Only renewable to age 65 -No cash value on the term -Renew policy every year -Every year the premium will increase |
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Level Premium Term |
-Where the premium stays the same every year -Is based on the insured average age during the five tear period. -At the end of the five year period, the premium would increase since it is based on the insured age and obviously after five years they got older |
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Re-entry option for term contracts |
A common feature of many term policies is that the insured gets 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 rate. |
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Decreasing Term |
-policy where the premium stays the same each year, but the annual coverage decreases, usually on a straight-in basis. -Usually written to protect mortgage balance of fill a business need. Mortgage PROTECTION INSURANCE -The face amount decreases each year -Written for periods of 10,20 or 30 years and epire at the end of the policy with no option to renew |
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Convertible Term |
-Level and Decreasing term policies are convertible ate any time to Whole Life Insurance without any physical exam -Premium would increase but only because Whole Life Insurance is more expensive |
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Continous Premium |
-Premium based on clients age at issue and can never be changed. -Client may surrender the policy for cash at anytime after cash values have accumulated. -This is the least-expensive permanent type of insurance in the long-run _Most expensive in the short-run |
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Limited Payment and Single Premium |
-Are like Ordinary or Straight Life Policies except premium is paid over a shorter period of time. -Has an immediate cash value |
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Truism |
The shorter the premium paying-period, the higher the premium. |
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Life Paid up by 65 |
-Must pay off Premiumsby 65,
-Does not reach maturity untill age 120. -Premium is always higher e |
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20-pay/30-Pay Life |
-Requires the client to pay over a shorter period of time (Just 20 years). |
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Single Premium Life |
-Policy become fully paid up by paying a single premium at policy inception. -Policy will have immediate cash value. |
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Variable Life |
-Has a level premium and a guaranteed minimum or face amount. -considered to be securities so you need a securities license to sell it. |
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Modified Premium and Graded Premium Whole Life |
-Discounts during the early years of a policy to make it easier to sell. -Premium increases gradually for 5 years -Premium is graded, not the face amount which remains level. |
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Endowment Policies |
-For retirement purposes -Educational purposes -Beneficiary would receive 50,000 by the insurance if they died between the ages of 25-65. -Always the most expensive type of life insurance -On an Endowment policy, the insured's cash value will equal the face amount of the policy at maturity, which is a predetermined time, say age 65, set by the insured when they buy the policy. Whole Life policies always reach maturity at age 120. |
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Adjustable Whole Life Insurance |
-Meets the insured changing needs and ability to pay premiums in an uncertain economic climate. |
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Universal Life |
-Flexible Premium -Policy holder may increase of decrease the death benefit without buying another policy -If the policyholder pays more premium, the cash value will increase -if there is enough money is the policy the costumer may skip premium payments -transparent meaning that all expenses must be shown -policy loans AR permitted -proceeds going to the benefitcary are non-taxable |
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Minimum Guarantee Rate |
4% |
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Indexed Whole life |
has a rate of return that may keep up with inflation. |
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Joint life insurance |
-may written in both whole life send term insurance -insured amount on the death of the first insured to die. - |
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Graded premium whole life |
-is sold at a discount -premium increases over a period of time -is for costumers who can not afford the insurance now vet anticipate to have more money in the future -for people with fluctuating incomes |
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Group Life insurance |
-30 day grave period -at Lear 75% of those eligible must participate -there must be at least 10 people in the group to participate -non-contributory plan so the employer pays 100% of the premiums |
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Life Settlement |
a contract between a policy holder and a third party ,who agrees to buy that owners policy for more than its. ash value and less than its face amount , |
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Limited pay whole life |
Limited pay whole life is a type of whole life, where the premiums are due only to a certain age, such as a LP 65, or are payable only for a certain number of years, such as a 20 pay life. |
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Viator |
- someone who enters into a viatical settlement |
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Suviorship life Insurance |
-only pay when the last party dies and are often used to pay estate taxes.
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Life Settlement |
A life settlement is a contract between a policy owner and a third party, who agrees to buy the owner's policy for more than its cash value but less than its face amount. The owner then assigns the ownership of the policy to the third party (absolute assignment), who names themselves as beneficiary. A life settlement is very similar to a viatical settlement, except on a life settlement, the policy owner does not have a terminal illness.
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Whole Life Insurance |
Whole Life insurance assumes that the insured will pay the premiums until death or until age 120, whichever comes first. If the insured is still alive at age 120, the policy will reach maturity and pay the insured the face amount or cash value, whichever is more. This is because the insurance company's Mortality Table states that everyone has died by their 120th birthday.
Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death |
