Flashcards
Social Security provides financial protection, supporting Americans throughout all of life’s journeys. Social security includes various benefits including retirement, disability, survivor, and family benefits, as well as Medicare. Sometimes you will see Social Security referred to as OASDHI (old age, survivor, disability, and health insurance).
A type of risk that involves a chance of gain or loss. Gambling involves speculative risk. Speculative risk is not insurable.
This provision states that the policy proceeds shall not be subject to the claims of creditors of the beneficiary or policyowner, to the extent permitted by law
When there is a non-working spouse, they can fund a spousal IRA, it is a traditional account.
The classification of a person applying for a life insurance policy who fits the physical, occupational, and other standards on which the normal premium rates are based.
An insurance company owned by its stockholders. Stock insurers issue nonparticipating policies. Dividends, when paid, are paid to the stockholders, not the policyholders.
STOLI stands for stranger-owned life insurance, it is also sometimes referenced as stranger-originated life insurance or stranger-oriented life insurance. A STOLI is a life policy in which strangers have an interest. STOLIs are illegal in many states due to a lack of insurable interest. IOLI stands for investor-owned life insurance.
The classification of a person applying for a life insurance policy who does not meet the requirements set for the standard risk. An additional premium is charged on substandard risks to provide for the probability that such a person will have a shorter life span than a standard risk.
Life insurance policy wording that specifies that the proceeds of the policy will not be paid if the insured takes his or her own life within a specified period of time after the policy´s date of issue.
A type of life insurance that provides a guaranteed fixed or decreasing amount of life insurance for a stated time period or term. Guaranteed premiums usually increase annually with the insured’s age and term products do not accumulate cash value or surrender values.
This would be the third in line to receive the death benefit, after the secondary beneficiary.
Insurance owned by a person other than the insured.
A retirement account that may be funded by anyone with earned income.
A transfer of risk shifts responsibility for losses from one party to another in return for payment. Insurance involves the transfer of risk from the insured to the insurer.
An arrangement where property is held by a person or corporation (trustee) for the benefit of others (beneficiaries). The grantor is the person who establishes the trust. The trustee manages the assets in the trust, following the trust agreement.
The person responsible for managing the trust. The trustee may be any person of legal age and sound mind.
A qualified retirement plan for public school employees and non-profit organizations, also referred to as a 403(b).
Unauthorized insurers are those who are nonadmitted, meaning they have not been approved or authorized to sell insurance in the state.
The person who reviews the insurance application and decides if the applicant is acceptable and at what premium rate.
The process by which a life insurance company determines whether it can accept an application for life insurance, and if so, on what basis so that the proper premium is charged.
Most states have adopted similar laws related to unfair claims settlement practices. These practices apply to both the insured and the insurer.
Unfair discrimination happens when similar risks are treated differently and premiums are based not on relative risk but on factors like race. State laws will address unfair discrimination related to insurance. For example, in some states, car insurance premiums cannot be based on gender. In those states to base car insurance premiums on gender would be a form of unfair discrimination.
Most states have adopted similar laws related to unfair trade practices. These include unfair discrimination, misrepresentations related to the benefits, advantages, conditions, or terms of an insurance policy, misrepresentations related to dividends, and misleading statements related to the financial health of the insurer, amongst many others.
Commonly referred to as the common disaster clause this Act says that when the insured and the primary beneficiary die from the same accident it is assumed the insured died last.
Insurance contracts are an example of a unilateral contract. This means they are one-sided. So long as the life insurance premium is paid, the insurance company promises to pay the beneficiary the death benefit if a certain event occurs (the insured dies). With a unilateral contract only the insurer makes a legally enforceable promise to pay covered claims.
A type of life insurance that provides a guaranteed amount of life insurance (subject to adjustment by the insured), but with premiums and cash values that are based upon prevailing interest rates in the economy, also known as interest-sensitive whole life. Universal life insurance has a flexible premium.
The USA PATRIOT Act requires financial institutions to establish anti-money laundering programs, which at a minimum must include: the development of internal policies, procedures, and controls; designation of a compliance officer; an ongoing employee training program; and an independent audit function to test programs. It requires the filing of currency transaction reports and suspicious activity reports with FinCEN (the Financial Crimes Enforcement Network, a division of the Department of the Treasury).
A type of annuity contract in which benefits and cash/surrender values vary in accordance with the investment experience of various types of securities (typically, shares in mutual funds) held by the insurer in the separate account. The rate of return in the separate account is variable. Variable annuities are considered to be securities. Agents (producers) marketing them must be registered with FINRA. Generally, producers will pass the Securities Industry Essentials Exam (SIE) and the Series 6 top-off to become registered with FINRA. Additionally, a life insurance license is needed. Variable annuities have tax-deferred earnings during the pay-in period. Most variable annuities are non-qualified, funded with after-tax dollars.
A form of life insurance, derived from whole life insurance, but without the guarantees, in which benefits and cash/surrender values vary in accordance with the investment experience of various types of securities held by the insurer in the separate account, on the same basis as variable annuities. Variable life is considered to be a securities product. Agents (producers) marketing them must have passed the SIE and either Series 6 or 7 and be registered with FINRA. In addition, a life insurance license is required. Variable life has a fixed (level) premium. The rate of return in the separate account is variable.
A type of life insurance combining the features of both variable life and universal life. A variable universal life policy is the only life insurance policy that allows the insured to self-direct funds in the separate account. Variable universal life has a flexible premium.
Viatical settlements involve the sale of an existing life insurance policy by a viator (person with a life-threatening or terminal illness) to a viatical settlement company in return for a cash payment that is a percentage of the policy´s death benefit.
Ownership of contributions made into a qualified plan. A participant vests in their contributions immediately. When they vest in the employer contributions depends upon the type of plan and ERISA requirements.
A period of time where no benefits are paid. It acts like a deductible, keeping the cost of the waiver of period rider affordable.
A voluntary giving up of a legal, given right.
If the underwriter approves an incomplete application the insurer is waiving their rights to contest a claim related to whatever was left blank (doctrine of waiver and estoppel).
The waiver of premium rider on a life insurance policy waives the premium in the event the owner of the policy becomes totally disabled, keeping the life insurance policy in force. When the insured meets the policy’s definition of total disability, a six-month waiting period begins. This waiting period acts like a deductible. If the insured satisfies the waiting period the insurer will return the premiums paid to the insured, and then waive the premiums going forward for as long as the insured is totally disabled.
Relieves the insurer of liability, or reduces the liability, for loss caused by war.
A warranty is a guarantee of truth. Applicants cannot be asked to warranty their health.
A type of life insurance that provides a guaranteed death benefit at a guaranteed flat premium and that accumulates cash value that may be borrowed against.