Life Insurance Individual Policies
Regarding Taxes

Premiums paid are ______
Life insurance Proceeds paid to the beneficiary are ________

Life Insurance Group Policies
Regarding Taxes

Portion paid by the employee (insured)
vs Portion paid by the employer (policy owner)
Life insurance Proceeds paid to the beneficiary are ________

This always starts from the date of policy delivery and usually last for 10 days.

Where an insured can cancel a policy and receive their first premium back with no penalties.

The ____ period is the first policy provision to apply if the premium is not paid on time. There are three you need to know:
-Individual life insurance & on Annuities
- Group Life insurance
-Industrial life insurance

These provisions only apply to policies with cash value. They apply when a policy lapses with cash value. Insurers give you 3 choices (CER)

Types of Non-Forfeiture Provisions

-C
- E
- R

Non-Forfeiture Provisions where You take your money ,no more coverage

Non-Forfeiture Provisions where You will get this option automatically if they don’t hear from you within 60 days

Non-Forfeiture Provisions where they take your cash value and buy you a single premium whole life

A period of time in which a newly issued policy’s claim can be contested. For Life insurance is for 2 years for everything including fraud.

A period of time after buying a policy during which suicide is excluded.

If an insured commits suicide during the suicide exclusion, the insurance company will

These are the various ways that a beneficiary can select to receive the proceeds from the insured’s life insurance policy. There are five options and they can be easily remembered using the word CIFFA.

Settlement option where the insurance company pays the beneficiary the face amount in cash

Settlement option where the insurance company keeps the money and pays the beneficiary interest on it

Settlement option where the insurance company pays the beneficiary a fixed amount monthly until the proceeds are exhausted

Settlement option where the insurance company pays the beneficiary for a specific period of time

Settlement option where the beneficiary selects to take monthly payments for his or her life

pertains to the amount of risk that a client poses to the insurance company. Some clients present more risk than others.

3 Types of Risk Classification

- N
- S
- P

is a client that may have a health problem or a dangerous hobby (avocation) or occupation. This type of person involves a higher risk to the company and would have to pay a higher premium than most people

is the average person and would pay an average premium

Preferred risk is someone who is in excellent shape and likely to live a long life. Their premium rate would be at a discount. They pose a lower risk to the insurance company so they pay a lower premium for coverage

A real-estate producer, because of her fluctuating income, might purchase what type of whole life policy?

Type of policy where a client may skip, reduce, or increase premiums (the premium is flexible).
The policy will not lapse as long as there is enough cash value to cover expense deductions.

allows the client to self-direct the cash value investment.

Variable products have no guarantees and are not backed by the

An increasing term policy's limits increase each year by the amount of premium paid. An increasing term policy is sometimes called a

is renewable without a physical examination, up to a certain age.

What insurance may be converted to this, but not the reverse. Conversion is based on the client's attained (current) age, but without a physical exam.

is a type of decreasing term. Benefits are paid directly to the creditor.
- not used as mortgage protection coverage, most mortgages are too long.
The policy limits cannot exceed the amount of the loan.

policies, though paid up earlier, do not mature until the client's age 100

offers flexible premiums.

Investing in variable products is considered a

Annuities are the opposite of life insurance. Life insurance creates an

systematically liquidate your estate over a period of time

Annuities, both individual and group, contain a ____ grace period.

Fixed annuities guarantee a fixed rate of return and are backed by the

If you die during the accumulation period of an annuity, the account value will be paid to

This Annuity has no beneficiary, and is the most risky option for the annuitant.

this type of annuity has the least amount of risk, to the client.

Variable life producers do not have to be registered with the New York Stock Exchange (NYSE) but They do have to be registered as a variable contracts producer with the

Similar to a mutual fund, Client’s funds invested in a variable life contract or variable annuity must be kept in the insurance company's

Client’s funds used to purchase whole life and fixed annuities, which is invested more conservatively, are kept in the insurance company's

This type of Policies must contain a table showing their guaranteed cash value at the end of each year (anniversary date) for the first 20 years. It is shown per unit (per $1,000). The mortality table and interest rate used in determining those values must also be shown.

The federal agency that regulates securities.

An association that regulates its own members.
You must be registered with the in order to sell a variable product

Annuity tables are different than mortality tables since there is no

Whole life and limited pay life both reach maturity at the same time

A single premium may buy a policy that is

Annuities are often used as life insurance

Universal life, variable life and variable/universal life are all
(adjustable whole life is not).

has a choice of death benefits, option A or B.

Variable whole life is an insurance and a securities product; hence it is regulated on the state level by the _______ and on the federal level by the ______

In order to renew renewable term the insured only has to

A flexible premium annuity allows the client to pay in

A joint and survivor annuity would pay while

Annuity that would be funded with a single premium and would begin payments 1 month later.

On a return of premium term insurance policy, if the insured does not die during the term, the premium is

___life insurance offers a minimum guaranteed interest rate on cash value accumulation, as well as the ability to be credited with additional earnings depending upon the performance of the index (typically the S&P 500 index).

A ________ policy is designed to provide protection until you die or reach age 100.

If your client buys a 20 pay life that means that they have purchased a whole life policy in which the
premium will be

If your client is age 30 and buys a 20 pay life, the policy premiums will be paid in full by the time the client is age

______ life insurance does not have a guaranteed interest rate or guaranteed cash value.

Usually purchased by couples, this policy will pay out the death benefit when the first party dies

If you take cash surrender on your annuity under age ____ there is a 10% early withdrawal penalty on any earnings. This penalty would be in addition to the ordinary income tax rates owed on the earnings.

the policy will pay out the death benefit when the last party dies. Commonly used to fund estate taxes

On this rider, additional amounts of insurance may be purchased without a physical exam only on certain option dates. If the option date is missed, it is lost and cannot be made up.

Insurance companies have this much time to defer a request for a loan or cash surrender, although they usually do not exercise this right.

A beneficiary has a vested interest in the policy (often is an ex-spouse).

Under this provision, it is assumed that the insured died last

The less frequent the mode of payment, the total annual premium will be

There is no service charge or fee if you elect this mode of payment.

the incontestability and suicide clauses start over, on

If the interest option is selected, the interest paid is subject to

The misstatement of age provision runs for the duration of the policy. Discovery of a misstated age results in

Proceeds of a life policy left to a beneficiary may not be attached by
If there is no beneficiary, proceeds will go into the estate, which may be attached by

The free look starts upon____
If the policy is mailed to the client by the company, the free look starts on the date of mailing. This is called constructive delivery.

This section of a life policy states who has the right to change the beneficiary, who can take a loan, and who can take cash surrender.

The owners of a mutual insurance company are the _______
Dividends received by the owner of a mutual policy are not taxable.

received by the owner of stock in a stock company are taxable as ordinary income; never taxed as capital gains.

If a beneficiary selects the interest option, interest payments (which are taxable) will vary, but the beneficiary may withdraw the principal when

The beneficiary does not have to be of the age of majority (18 or 21 depending upon the state) in order to receive policy proceeds. However, minors may not sign releases!