Life & Health Insurance Exam Colorado Questions AND Correct
Answers
Accelerated Death Benefits - ✔✔-Also known as Living
Benefits Rider, 12 months or less
-Apply when insured gets a terminal illness
-Insurer will pay out a portion of death benefit
-Face amount paid to beneficiary at death is reduced by the
amount paid out while living
-Money must be used to pay hospital bills
Accidental Death Benefit Rider - ✔✔-Type of Insurance Rider
-Death must occur within 90 days of accident or it is assumed
to be form of natural causes
-Doesn't cover death due to sickness only accidents
Adjustable Whole Life----TEST - ✔✔-Sold to clients with
fluctuating incomes----TEST
-Combination of term and whole life----TEST
-Coverage may not be increased without physical exam---
TEST
Annuity Pay-Out Options - ✔✔-Contractual; cannot be
changed once selected
-Amount received in excess of cost are taxable as ordinary
income
,-For life
-Cash surrender under age 59.5 subject to IRS 10% penalty
-Non-qualified=Funded with after tax dollars
Assignments - ✔✔-Absolute assignment is permanent change
of ownership--TEST
-Collateral assignment is temporary
-Often used when insurance is required as a condition to a
loan---TEST
Beneficiary Designations - ✔✔-Primary beneficiary receives
proceeds when insured dies
-Can have as many primaries as wanted
-Guardian must be appointed for children
-Company may designate irrevocable beneficiary
-Common disaster clause
-Applies if insured and primary beneficiary both day as a
result of the same accident
-Insured always dies last even if not the case
-Primary beneficiary must die within 10 days for clause to be
enacted
Business Disability Buyout Policy - ✔✔-Utilizes buy-sell
agreement
,-Lump Sum
-Paid to able partner
-Premiums not tax deductible
-Proceeds not taxable
Business Overhead Expense Policy (BOE) - ✔✔-Includes on
going business expenses ex. rent, wages, utilities
-Premiums tax deductible
Changes in the Application - ✔✔Can never make changes
unless the applicants initials have changed
COAL - ✔✔-Four elements required to have a legal contract
-C=Consideration
-O=Offer
-A=Acceptance
-L=Legal
Collecting Initial Premiums & Issuing Conditional Receipts -
✔✔-Producers gives applicant a conditional receipt
-C.O.D. Collect on delivery submittal applications
-No coverage exists since no premium has been paid
-Producer delivers policy and collects premium, now the
coverage begins
, -Producer also obtains a statement of good health
-Life and health producers never use binders-verbal
agreement, they are not allowed
Combination Plans & Life Insurance Policy Variations - ✔✔-
Joint Life Policy
-Survivorship Life Policy
Consequences of Accepting an Incomplete Application - ✔✔-
Constitutes a waiver, the voluntary act of giving up legal
rights
-Estoppel- Inability to enforce legal rights once given up - 2
years
Consideration - ✔✔-Required for legal contract
-Applicant's consideration is the premium paid + applicant's
statements on application
-Insurer's consideration is their promise to provide coverage
in return
Consideration Clause - ✔✔-An exchange of values
-Pays first premium then answers questions on application
-Representation is truth to the best of your knowledge
-Company agrees to provide coverage in exchange
-No coverage unless premium is paid
Answers
Accelerated Death Benefits - ✔✔-Also known as Living
Benefits Rider, 12 months or less
-Apply when insured gets a terminal illness
-Insurer will pay out a portion of death benefit
-Face amount paid to beneficiary at death is reduced by the
amount paid out while living
-Money must be used to pay hospital bills
Accidental Death Benefit Rider - ✔✔-Type of Insurance Rider
-Death must occur within 90 days of accident or it is assumed
to be form of natural causes
-Doesn't cover death due to sickness only accidents
Adjustable Whole Life----TEST - ✔✔-Sold to clients with
fluctuating incomes----TEST
-Combination of term and whole life----TEST
-Coverage may not be increased without physical exam---
TEST
Annuity Pay-Out Options - ✔✔-Contractual; cannot be
changed once selected
-Amount received in excess of cost are taxable as ordinary
income
,-For life
-Cash surrender under age 59.5 subject to IRS 10% penalty
-Non-qualified=Funded with after tax dollars
Assignments - ✔✔-Absolute assignment is permanent change
of ownership--TEST
-Collateral assignment is temporary
-Often used when insurance is required as a condition to a
loan---TEST
Beneficiary Designations - ✔✔-Primary beneficiary receives
proceeds when insured dies
-Can have as many primaries as wanted
-Guardian must be appointed for children
-Company may designate irrevocable beneficiary
-Common disaster clause
-Applies if insured and primary beneficiary both day as a
result of the same accident
-Insured always dies last even if not the case
-Primary beneficiary must die within 10 days for clause to be
enacted
Business Disability Buyout Policy - ✔✔-Utilizes buy-sell
agreement
,-Lump Sum
-Paid to able partner
-Premiums not tax deductible
-Proceeds not taxable
Business Overhead Expense Policy (BOE) - ✔✔-Includes on
going business expenses ex. rent, wages, utilities
-Premiums tax deductible
Changes in the Application - ✔✔Can never make changes
unless the applicants initials have changed
COAL - ✔✔-Four elements required to have a legal contract
-C=Consideration
-O=Offer
-A=Acceptance
-L=Legal
Collecting Initial Premiums & Issuing Conditional Receipts -
✔✔-Producers gives applicant a conditional receipt
-C.O.D. Collect on delivery submittal applications
-No coverage exists since no premium has been paid
-Producer delivers policy and collects premium, now the
coverage begins
, -Producer also obtains a statement of good health
-Life and health producers never use binders-verbal
agreement, they are not allowed
Combination Plans & Life Insurance Policy Variations - ✔✔-
Joint Life Policy
-Survivorship Life Policy
Consequences of Accepting an Incomplete Application - ✔✔-
Constitutes a waiver, the voluntary act of giving up legal
rights
-Estoppel- Inability to enforce legal rights once given up - 2
years
Consideration - ✔✔-Required for legal contract
-Applicant's consideration is the premium paid + applicant's
statements on application
-Insurer's consideration is their promise to provide coverage
in return
Consideration Clause - ✔✔-An exchange of values
-Pays first premium then answers questions on application
-Representation is truth to the best of your knowledge
-Company agrees to provide coverage in exchange
-No coverage unless premium is paid
