Life Insuarance Basics

  1. Name 3 instancs in which insurable interest exists.
    An applicant insuring his or her own life.

    An applicant insuring the life of a family member (relative or spouse)

    An applicant insuring the life of a business partner, key employee, or someone who has a financial obligation to them.
  2. Give an example of a situation where life insurance would help.
    Survivor Protection

    Estate Creation

    Cash Accumulation


    Viatical Settlements
  3. What needs to be considered when planning for survivor protection?
    Current assests and liabilities

    Determining what survivors' needs may be
  4. If a person wants to accumulate money for specific needs, is life insurance a good option? Explain
    Kinda, whole life policy offers cash value
  5. In a Viatical Settlement what does the viator recieve when the policy is sold?
    Receive a percentage of the policy's face value
  6. What is the main difference between Viatical Settlements and Accelerated Death Benefits?
  7. Human Live Value is based upon the loss of what?
    Based on problable future earnings of the insured using...



    # of years to retirement

    Time value of money.
  8. What is the needs approach based upon?
    Based on the predicted needs of a family after the premature death of the insured.
  9. What is the main difference between capital liquidation and capital retention?
    Capital Liquidation involves selling assets

    Retention is the retaining of assets
  10. What is the purpose of a buy-sell agreement?
    Determines what will be done with a business in the event that an owner dies or becomes disabled.
  11. Describe a Stock Redemption buy-sell agreement.
    Under corporate ownership if the business owns the policies, pays the premiums, and is the beneficiary.
  12. What is the purpose of key person insurance?
    Lessens the risk of financial loss bucause of the premature death of a key employee that has specialized knowledge, skills, or business contacts.
  13. Give an example of when a key person policy would be beneficial.
    A model could insure their legs
  14. How is a life insurance policy given as an executive bonus taxed?
    The premium is taxed as income
  15. How does a participating life insurance policy given as an executive bonus taxed?AzqQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ X21111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111
  16. How does a participaing life insurance policy differ from a non-participating policy?
  17. What are the 3 factors theat determine the premium for a particular policy?
  18. How does the premium mode affect the total premium paid for the year?
  19. If a person in an insurance commercial is a paid actor, what must the advertisement include?
  20. What are illustrations in life insurance policies?
  21. What basic information is required to be part of illustrations?
  22. What is prohibited when using an illustration in the sale of a life insurance policy?
  23. What is underwriting?
  24. Describe the differences between Part 1 & Part 2 of the application?
  25. What is the purpose of the agent's report?
  26. Who is required to sign the application?
  27. When does an insurance policy go into force if there is premium whith the application? If there is no premium with the application?
  28. At what point does coverage begin when an agent issues a Conditional Receipt?
  29. When is a policy considered delivered?
  30. What is the purpose of having the insured sign a statement of good health?
  31. How can an insurance company use the information it obtains from the Medical Information Bureau?
  32. When do insures usualy require an HIV test?
  33. How does a substandard risk policy differ from a standard risk?
  34. Which risk classification typically qualifies for lower premiums?
Card Set
Life Insuarance Basics
basic concepts pertineent to life insurance