Chapter 3 Policies, provisions, options, and riders Flashcards Preview

NC Life Insurance Exam > Chapter 3 Policies, provisions, options, and riders > Flashcards

Flashcards in Chapter 3 Policies, provisions, options, and riders Deck (26)
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1
Q

3 Basic Categories of Coverage

A
  1. Ordinary
  2. Industrial
  3. Group
2
Q

Ordinary Insurance

A

Life insurance of commercial companies not issued on a weekly premium basis.

Amount of protection is usually $1,000 or more

3
Q

Industrial Insurance

A

Provides modest benefits on relatively short benefit period.

Premiums collected on weekly or monthly basis by an agent calling at insureds home.

4
Q

Group Insurance

A

Coverage for group of people, usually employees of a company under 1 contract.

5
Q

Term Insurance (3 types)

A
  • No cash values
  1. Level term
  2. decreasing term
  3. increasing term
6
Q

Level Term Insurance

A

face value remains unchanged from the date policy comes into force until the day it expires.

7
Q

Decreasing Term Life Insurance

A

Face value decreases in scheduled steps from the day policy comes into force until expiration.

premium remains level

8
Q

Increasing Term Life Insurance

A

Death benefit increases periodically over the policy’s term

9
Q

most term policies contain option to renew or convert, what do those terms mean?

A

renew- renew policy without having to show evidence of insurability

convert- choice to change term policy to whole life policy at renewal without evidence of insurability

10
Q

6 variations of Permanent (whole) Life Insurance

A
  1. Straight Whole Life
  2. Universal Life
  3. Variable Life
  4. Adjustable Life
  5. Modified Life
  6. Family Life

whole life policies build cash value and mature at age 100

11
Q

Straight Whole Life

A

permanent level insurance protection for whole life of policy

level premiums, level benefits, cash values

12
Q

Modified Whole Life

A
  • premiums payable during first few years
  • slightly larger than rate for Term insurance
  • afterward, premium is higher for remainder of life than premium for ordinary life at original age of issue but lower than rate at age attained
13
Q

Are death benefits payable to the beneficiary taxable?

A

NO

14
Q

Rights of ownership provides right to…

A
choose and change beneficiary
determine how benefits will be dispersed
right to policy loans
right to policy dividends
assign ownership to someone else
right to cancel policy
15
Q

When a life policy is reinstated does a new suicide exclusion go into effect?

A

NO

16
Q

Suicide Clause

A

2 year time period, if owner commits suicide benefits will not be paid.

17
Q

Transfer of ownership also know as…

new owner known as…

A

assignment

assignee

18
Q

Accelerated Death Benefits Provision

A

allows insured to become their own beneficiary if they become terminally ill or suffer a life threatening condition

19
Q

Nonforfeiture options include

A
  1. cash surrender
  2. reduced paid up
  3. extended term
  4. automatic loan
  5. dividend accumulations
20
Q

Are policy dividends taxable income?

A

NO, considered a return or premiums paid.

21
Q

Endowment Policies

A

contract for payment of face amount at end of a fixed period, at a specified age, or at insureds death

22
Q

Graded Premium Whole Life

A

lower than normal premium rates during first few years.
premiums increase gradually each year
after preliminary period premiums level off and remain constant.

23
Q

Indexed Whole Life

A

death benefit increases according to inflation

24
Q

Limited Pay Whole Life

A

premium payments only made for a limited # of years

25
Q

Modified Endowment (MEC)

A

amount owner pays during first years exceeds level that would have been payable to provide paid up future benefits in 7 years

26
Q

Single Premium Whole Life

A

Whole Life Insurance, premium paid all at once up front.