Missouri Life and Health Insurance- Types Of Life Policies Review Questions and Correct Answers Already Passed
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Missouri Life and Health Insurance- Types Of Life
Institution
Missouri Life And Health Insurance- Types Of Life
Missouri Life and Health Insurance- Types Of Life Policies Review Questions and Correct Answers Already Passed
Attained age - Answers the insured's age at the time the policy is issued or renewed
Cash value - Answers a policy's savings element or living benefit
Face amount - Answers the amount ...
Missouri Life and Health Insurance- Types Of Life Policies Review Questions and Correct Answers
Already Passed
Attained age - Answers the insured's age at the time the policy is issued or renewed
Cash value - Answers a policy's savings element or living benefit
Face amount - Answers the amount of benefit stated in the life insurance policy
Fixed life insurance - Answers contracts that offer guaranteed minimum or fixed benefits
Deferred - Answers withheld or postponed until a specified time or event in the future
Endow - Answers the cash value of a whole life policy has reached the contractual face amount
Level premium - Answers the premium that does not change throughout the life of a policy
Liquidation of an estate - Answers converting a person's net worth into a cash flow
Nonforfeiture values - Answers benefits in a life insurance policy that the policyowner cannot lose even
if the policy is surrendered or lapses
Policy maturity - Answers in life policies, the time when the face value is paid out
Qualified plan - Answers a retirement plan that meets IRS guidelines for receiving favorable tax
treatment
Securities - Answers All of the investments, including stocks, bonds, mutual funds, options, and
commodities, that are traded.
Suitability - Answers a requirement to determine if an insurance product is appropriate for a customer
Variable life insurance - Answers contracts in which the cash values accumulate based upon a specific
portfolio of stocks without
guarantees of performance
All life insurance policies fall into 2 categories - Answers temporary and permanent protection are
categories of what life of insurance
Term Insurance - Answers Insurance that only provides coverage for a *specific period of time*, AKA
temporary coverage
Pure life insurance. - Answers term insurance is also known as
Term Insurance - Answers The type of life insurance that provides for the greatest amount of coverage
for the lowest
premium as compared to any other form of protection.
, Term insurance provides what is known as pure death protection: - Answers • If the insured dies during
this term, the policy pays the death benefit to the beneficiary;
• If the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the
term; and
• There is no cash value or other living benefits.
Level, Increasing, & Decreasing - Answers Three basic types of term coverage, based on how the face
amount (death benefit) changes during the policy term:
Term insurance has the following characteristics - Answers Regardless of the type of term insurance
purchased, 1) the premium is level throughout the term of the policy; 2) only the amount of the death
benefit may fluctuate, depending on the type of term insurance. 3) Upon selling, renewing, or
converting the term policy, the premium is figured at attained age (the insured's age at the time
of transaction).
Level term insurance - Answers Term insurance provides a level *death benefit*. The policy remains the
same from the date the policy is issued until the date the policy expires.
Level Premium Term - Answers Term insurance which provides a *level death benefit and a level
premium* during the policy term. For example, a $100,000 10-year level term policy will provide a
$100,000 death benefit if the insured dies any time during the 10-year period.
Annually renewable term (ART): - Answers the purest form of term insurance. The death benefit remains
level, and the policy may be guaranteed to be renewable each year without proof of insurability, but the
premium increases annually according to the attained age, as the probability of death increases.
Decreasing term policies - Answers feature a level premium and a death benefit that decreases each
year over the duration of the policy term.
Decreasing term coverage is commonly purchased to insure: - Answers This type of insurance is
purchased to insure the payment of a mortgage or other debts if the insured dies prematurely. The
amount of coverage thereby decreases as the outstanding loan balance decreases each year. A
decreasing term policy is usually convertible; however, it is usually not renewable since the death
benefit is $0 at the end of the policy term.
Return of premium (ROP) - Answers This type of life insurance is an increasing term insurance policy that
pays an additional death
benefit to the beneficiary equal to the amount of the premiums paid. The return of premium is paid if
the death occurs within a specified period of time or if the insured outlives the policy term.
How are ROP's Structured? - Answers ROP policies are structured to consider the low risk factor of a
term policy but at a significant increase in premium cost, sometimes as much as 25% to 50% more.
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