CA PSI LIFE ACCIDENT AND HEALTH EXAM 4
EXAM REVIEW STUDY NOTES
◉ Waiver of Premium.
Answer: Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive
premiums for the duration of the disability or the end of the policy,
whichever occurs first.
To qualify for the waiver, the insured must be disabled for a waiting
period of 3-6 months.
The policyowner must continue to pay premiums during the waiting
period, but once eligible, the waiver is retroactive to the start of the
disability and the premiums will be refunded.
During the disability, the insured will credit the premiums to the
policy and all benefits, such as cash value accumulation and
dividend payments, will continue.
◉ Disability Income Rider.
Answer: Life Insurance Disability Rider
,In the event of total disability and after the initial waiting period
(such as 6 months), premiums are waived and the insured is paid a
monthly income.
The monthly disability income benefit is typically limited to a
percentage of the face value.
The benefit paid from the rider does not reduce the death benefits
paid out upon death.
◉ Accidental Death Benefit rider.
Answer: Life Insurance Rider affecting the death benefit amount
May be called multiple indemnity rider
In the event of a claim, the policy normally pays double or triple the
face amount only if the insured's death was a result of an accident.
The benefit is payable only if death occurs before a specific age and
within 90 days of the accident
◉ Separate Account (Variable) vs General Account (Life Insurance).
Answer: The separate account is invested in debt or equity securities
as offered by the insurance company.
,o Both the cash value in the separate account and the death benefit
will fluctuate based on market conditions and performance of the
subaccounts.
o There is no guaranteed minimum return on the cash value in the
separate account and the policy may lose both cash value and death
benefit if there are market losses.
o The death benefit is recalculated annually.
The general account provides a fixed rate of interest and the cash
value in the general account provides for a guaranteed minimum
death benefit.
◉ Viatical Settlement.
Answer: An agreement between a policyowner and a third-party
buyer to purchase the life policy covering a person who is diagnosed
as terminally ill with less than 24 months remaining life expectancy.
◉ Principle of Indemnity.
Answer: To indemnify means to restore a person, in whole or in part,
to the same physical or financial condition which existed prior to a
loss, but without profit or gain.
In life and health insurance, it may not be possible to truly indemnify
a person for all losses.
, o Instead, indemnity takes the form of cash (a death or disability
income benefit) or payments to physicians or hospitals for care and
services provided to an insured who is injured or ill.
◉ Joint Life.
Answer: Joint Life (First to Die) is a whole life policy that is written
to cover 2 or more lives.
• The death benefit is paid upon the first insured to die and the
policy terminates.
◉ Joint Survivorship.
Answer: Joint Survivorship (Last to Die) is a whole life policy written
to cover 2 or more lives, and the death benefit is not paid until the
last insured dies.
◉ Family Policies.
Answer: To this base life insurance policy, a term insurance rider is
attached that is designed to provide a monthly income to the
survivor if the insured dies during the specified term.
◉ Irrevocable Beneficiary.
Answer: An irrevocable beneficiary has certain guaranteed rights to
assets held in the policy, and this beneficiary must agree to any
changes in rights to compensation from policyowner.
EXAM REVIEW STUDY NOTES
◉ Waiver of Premium.
Answer: Life Insurance Disability Rider
If the insured becomes totally disabled, the insurer will waive
premiums for the duration of the disability or the end of the policy,
whichever occurs first.
To qualify for the waiver, the insured must be disabled for a waiting
period of 3-6 months.
The policyowner must continue to pay premiums during the waiting
period, but once eligible, the waiver is retroactive to the start of the
disability and the premiums will be refunded.
During the disability, the insured will credit the premiums to the
policy and all benefits, such as cash value accumulation and
dividend payments, will continue.
◉ Disability Income Rider.
Answer: Life Insurance Disability Rider
,In the event of total disability and after the initial waiting period
(such as 6 months), premiums are waived and the insured is paid a
monthly income.
The monthly disability income benefit is typically limited to a
percentage of the face value.
The benefit paid from the rider does not reduce the death benefits
paid out upon death.
◉ Accidental Death Benefit rider.
Answer: Life Insurance Rider affecting the death benefit amount
May be called multiple indemnity rider
In the event of a claim, the policy normally pays double or triple the
face amount only if the insured's death was a result of an accident.
The benefit is payable only if death occurs before a specific age and
within 90 days of the accident
◉ Separate Account (Variable) vs General Account (Life Insurance).
Answer: The separate account is invested in debt or equity securities
as offered by the insurance company.
,o Both the cash value in the separate account and the death benefit
will fluctuate based on market conditions and performance of the
subaccounts.
o There is no guaranteed minimum return on the cash value in the
separate account and the policy may lose both cash value and death
benefit if there are market losses.
o The death benefit is recalculated annually.
The general account provides a fixed rate of interest and the cash
value in the general account provides for a guaranteed minimum
death benefit.
◉ Viatical Settlement.
Answer: An agreement between a policyowner and a third-party
buyer to purchase the life policy covering a person who is diagnosed
as terminally ill with less than 24 months remaining life expectancy.
◉ Principle of Indemnity.
Answer: To indemnify means to restore a person, in whole or in part,
to the same physical or financial condition which existed prior to a
loss, but without profit or gain.
In life and health insurance, it may not be possible to truly indemnify
a person for all losses.
, o Instead, indemnity takes the form of cash (a death or disability
income benefit) or payments to physicians or hospitals for care and
services provided to an insured who is injured or ill.
◉ Joint Life.
Answer: Joint Life (First to Die) is a whole life policy that is written
to cover 2 or more lives.
• The death benefit is paid upon the first insured to die and the
policy terminates.
◉ Joint Survivorship.
Answer: Joint Survivorship (Last to Die) is a whole life policy written
to cover 2 or more lives, and the death benefit is not paid until the
last insured dies.
◉ Family Policies.
Answer: To this base life insurance policy, a term insurance rider is
attached that is designed to provide a monthly income to the
survivor if the insured dies during the specified term.
◉ Irrevocable Beneficiary.
Answer: An irrevocable beneficiary has certain guaranteed rights to
assets held in the policy, and this beneficiary must agree to any
changes in rights to compensation from policyowner.
