CA Life and Health insurance 3 Flashcards

life insurance policy
Terms Definitions
Other premium factors
3 classifications of risk
3 types of hazards
Succession levels of beneficiaries
Failure to communicate information
Funding methods
Single payment
Periodic payments
ALIEN insurer:
incorporated OUTSIDE the U.S.
2 types of risk
Pure (insurable)Speculative
Which costs less?
group life insurance
individual insurance
Investigates, negotiates, and settles claims or adjusts losses on behalf of insurer, insured or self insured
Keep original premium, cash values, and now new suicide clause.
10 or more employeesemployer pays premiumusually term insurance
Immediate annuity
Lump-sum (single premium) deposit begins generating income payments immediately
Def underwriting
Classify, Select and rate risks.
margaret applies for an insurance license, but the commission decides not to issue the license becasue of her tarnished reputation. She notifies the commmission that she wants to dispute this judgment in a hearing. the commission must give her at least ho
Are there requirements for medical exams for group insurance?
Per capita
Proceeds divided equally among surviving beneficiaries
if all primary and contingent beneficiaries are deceased
Beneficiaries may/may not initial changes to an application.
may not
An individual employed by a licensed resident agent (who is appointed by the insurer) to solicit insurance and perform other duties to help the agent
restores an insured to the condition he/she was prior to the loss.
Spendthrift Clause
Protects the policy proceeds from creditor claims of either the beneficiary or the policy owner.
to be currently insured, a person must have earned ___ credits durring the ___ quarter period preceeding death
Accumulation period
owner deposits funds with life insurance company; payments and interest accumulate
Who selects the settlement option if the policy owner doesn't?
which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child?
third-party ownership
Insurance companies may be classified according to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders is a
Mutual Insurer
which of the following insurance coverages would be allowed with an MSA?
Workers compensation
Who selects the settlement option if the policy owner doesn't?
3 categories of Life insurance - OIG
Installment period
Guarantees income to annuitant for life.
If annuitant dies before payments have equaled the annuity fund, balance to beneficiary
Contract law
Deals with the formation and enforceability of contracts.
8 unique features of an insurance contract
Valued or indemnity
Insurable interest
Utmost good faith
In insurance, RISK is defined as:
Uncertainty regarding LOSS
True or False?: initial premium must be submittedto the insurer with the completed application
Deductible found in a major medical policy are typically expressed as a
fixed-dollar amount
All life insurance policies have a CASH VALUE ACCUMULATION, EXCEPT:
Individual Uses for Life insurance
Final Expense fundhousing fundedcation fundsurvivor fundemergency fundretirement incomeincome if disabled
constructive delivery
when the insurer delivers the policy to someone acting for the insured (agent).
A non-participating policy (non par) is issued by ___.
a stock insurer
Pete is hopitalized with a back injury. Upon checking his disablity income policy, Pete learns that he will not be eligible for benefits for at least 30 days. this would indicate that his policy was probably written with a 30-day
Elimination period
Equity index annuties
they have a guaranteed minimum interest rate.
The interest rate is tied to an index such as the Stadard & Poors 500.
They invest on a more aggressive basis aiming for higher returns.
Key person
key employee protects the employer in teh event a valuable employee dies.
Automatic premium loan
Insurer borrows the premium amount from cash value to keep coverage in force. Not found in term insurance.
Adverse Selection
when the uninsurable seek to purchase insurance resulting in great losses to the insurers.
Short rate cancellation
unearned premiums are returned without a penalty.
Risk Pooling
reduces financial risk among the many insured.
makes predicting losses much easier for insurers
constructive delivery
when the insurer delivers the policy to someone acting for the insured (agent).
Term life insurance
Face amount is specified
Temporary insurance
Usually lowest cost
term life periods
term life premiums
Level, increasing and decreasing terms
Fair Credit Reporting Act
applicant for insurance BE INFORMED that a consumer report may be requested regarding his application
Buying insurance means:
transferring risk (the loss goes to the INSURER - the company insuring)
A disability income contract that PAYS the EXPENSES of a firm if the owner becomes disabled best describes:
Business Overhead Expense
An insurer must send out claim forms when requested by claimant w/in how many days?
15 days
The benefit amount payable as a result of accidental death is referred to as the
Principal Sum.
Periodic payments made over a fixed period for the duration of a person's life is known as a(n):
ANNUITY (the annuitant)
Guaranteed Insurability rider
option to purchase addl policies at specific ages without evidence of insurability.Ages 25-40
Straight life annuity
Payments for lifetime of annuitant - no other guarantees
"Take it or leave it" Drafted by one party and either accepted or rejected.Ambiguous
What is the other term for cash payment settlement option?
Lump sum
Revocable Beneficiary
has only a passive interest in the face amount of the policy. Can be replaced at any time.
A participating policy (par) is issued by ____.
a mutual insurer
Cash value
the savings amount in a whole life policy.
10-day free look period begins at the time of...
delivery of policy
_________ is an example of a nonprofit org. providing health care benefits.
Blue Cross/Blue Shield
WRITTEN PROOF of loss must be sent to insurer w/in how many days?
90 days
Misstatement of age or sex
face amount is adjusted to correct.
Conditional contract
when the insurer pays a claim for a covered loss
Life with period certain
Payments for lifetime of annuitant - guaranteed to a beneficiary for a specific time if annuitant should die first.
a participating insurance policy may do which of the following
pay dividends to the policyowner
All of the following are dividend options
paid-up additons.
Accumulated at interest.
Reduction of premium.
Penalty for Fraud
$150,000 or double to amount of the fraud if over $150k.
And/or, 1 year in jail or 2-5 years in state prison.
Definition of disability
must be unable to perform the duties of any occupation, cannot perform any substantial gainful work
Waiver of premium rider
In case of disability, all premiums waived and benefits continue.
Conditional contract
when the insurer pays a claim for a covered loss
INCREASING TERM policy does what:
increases face value with each payment of premium.
applicant must be advised that a consumer report may be requested
types of group life plans
Group term - no cash valueGroup permanent - a) Group ordinaryb) Group paid upc) Group universal
3 people in a life insurance contract
owner applicantinsured(can be same person)
Information NOT required in a contract:
Known informationInfo that should be knownInfo about which communication has been waivedInfo that is not material to the risk
After the insured accept payment from the insurer, they have been indemnified.
Insurance policies required the insured to transfer any right to recovery to the insurer so that they may seek recovery up to the amount they paid as loss.
A participating insurance plicy may do which of the following
Pay dividends to the policyowner
substandard risk classification is also referred to as
rated since these policies could be issued with the premium rated-up, resulting in a higher premium.
Benefits received by the employee that are attributable to his portion of the contribution
are not taxable as income
When must insurable insterest exist in a life insurance policy?
At the time of application
Contracts that are owned by someone other than the insured are known as third-party ownership
most policies involving third-party ownership are written in business situations or for minors in which teh parent owns the policy
which of the following will be included in a policy summary
premium amount and surrender values
which of the following is deemed to be consideration on part of the applicant, in respect to the Consideration Clause?
Payment of premium
_____ or _______ is not a basis for considering what type of HIV/AIDS test can be adminstered by an insurer.
Marital Status
Sexual orientation
Waiver of payors premium rider
In case of disability of death, premiums will be paid by the insurer until the insured reaches a specified age.
Ordinary life insurance (individual policies)
can be term, whole life, endowments, universal life, variable life.
4 characteristics of Major Medical policies:
1] High Max. Limits 2] Blanket Coverage 3] Coinsurance (80/20) 3] Deductibles
Annuity that provides guaranteed UNITS instead of Dollars is?
VARIABLE (units are invested in common stocks, therefore each time benefit is paid can vary and is therefore not guaranteed)
(Annuity) - Periodic Premium Plans: Flexible Premium (2 characteristics) [Opposite of Periodic Premium Plan]
1] insured pays a periodic flexible premium which may vary from year to year. 2] annuity benefit depends upon the size of the accumulated funds when payout begins.
(Annuity) Equity Indexed Annuities
cannot decrease in value, is tied to a stock market-related (EQUITY) index [Standard & Poor's 500]. The value can only increase because of stock appreciation but CANNOT DECREASE in value.
Qualifications for disability benefits for SS.
under age 65, if over 30, must be fully insured, disability must be at least 12 months or lead to death
Only an immediate annutiy can
begin paying out in less than 1 year
A misrepresentation would be considered fraud if it is intentional and material.
Fraud would be grounds for voiding the contract.
One way universal life differs from adjustable life is
that the policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium
To supplement the information on the application
the underwirter may order an inspection report which covers financial and moral information
Return policies in California
Under age 60 - 10 days free look.
60 and over - 30 days free look.
The two main features of TERM LIFE INSURANCE are:
RENEWABLE feature (based on attained age) & CONVERTIBLE feature (permits policyowner to exchange a term policy for a whole life contract w/out evidence of insurability)
The life income with period certain option gaurantees payments for the life of the recipient and also specifies a gauranteed period of continued payments.
If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.
Deferred annuities may be purchased with either a single lump sum or periodic payments,
but they do not begin the income payments until sometime after 1 year from the date of purchase.
When a building burns, fire is the peril. When a person dies, death is the peril. When an individual is injured in an accident, the accident is the peril. A PERIL is...
the immediate event causing LOSS (and giving rise to risk).
an applicant for a $100,000 life insurance policy was required to undergo HIV testing before the policy could be approved. If the results came negative, and there was no physicians designated, where would the results be released?
The results do not need to be released
A woman misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the constestable period had expired. The insurance company will take which of the following actions regarding any claim th
Adjust the claim benefit to reflect the woman's true age
A person age 65 who want to ensure that he receives the largest possible monthly benefit from his fixed annuity should select what type of annuity?
LIFE annuity (provides payments to the annuitant from a specified date and for the rest of the annuitant's life. Payments cease upon death with no refund to survivors therefore providing the maximum income per dollar of premium).
Exceptions to the National Do Not Call List
Calls for which the consumer has given prior written permission.
Calls which are not commercial or do not include unsolicited advertisements.
Calls by or on behalf of tax-exempt non-profit organizations
formula for calculating a 80/20 coinsurance provision with a $500 deductible and an expense of $3700:
$3700 - $500 = $3200 X .8 = $2560 - $3700 = $1140 (the amount insured is responsible for)
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