ALU 101 - Chapter 9: Life Insurance
Products, Marketing And Distribution
Questions And Answers
Life binsurance b- bcorrect banswers✔✔a bcontract bthat bprotects bindividuals, bfamilies bor
bbusinesses bagainst bloss bof beconomic bvalue bupon binsured bdeath
CUPS b- bcorrect banswers✔✔Commission, bUnderwriting, bproducts band bservice
Customer bneeds b- bcorrect banswers✔✔1. bprotect band/or breplace beconomic bvalue
2. bpay boff binevitable blast bexpenses
3. bprovide bmeaningful bexecutive bbenefits
4. btransfer bassets befficiently
5. baccumulate btax-favored binvestment baccount b(cash bvalue baccount)
Product bdevelopment b- bcorrect banswers✔✔1. bPricing
2. bunderwriting
3. badministration
4. bmarketing
Pricing b- bcorrect banswers✔✔adequate bpremium blevels bsustain bthe bcompany,
bproviding ba bcomfortable bprofit bmargin bto ballow bgrowth band bto bweather beconomic
bbusiness bcycles bor bdisasters; bpremiums bmust bbe benough bto bcover beach brisk
bassumed
Major bcomponents bin bpricing b- bcorrect banswers✔✔1. bMortality
2. bExpenses
3. bInvestments
4. bProfit
Mortality b- bcorrect banswers✔✔represent bexpected bcost bof bpaying bthe bdeath bbenefit
bon bnumber bof bdeaths bwithin ban binsured bgroup bover ba bperiod bof btime
Expenses b- bcorrect banswers✔✔involves bthe bcost bto boperate bthe bcompany
Investments b- bcorrect banswers✔✔assumptions babout ba breasonable brate bof breturn
bthat bmust bbe bearned bto bensure bmonies bare bavailable bto bpay bfuture bclaims
, Profit b- bcorrect banswers✔✔seek bprofit blevel bas ba breturn bon binvestment bor ba
breturn bon bequity
New bbusiness band bunderwriting banalysis b- bcorrect banswers✔✔1. bdoes bthe
bapplication bask bthe bright bquestions
2. bif bnew bproduct, bhave bthe bappropriate bquestions bbeen badded bto bthe bapp?
3. bis bthe bproduct bdesigned b& bpriced bto ballow bsubstandard brisks bthe bopportunity bto
bpurchase bproduct bat ba bhigher bpremium?
4. bDoes bthe bproduct's bintro brequire ba bnew bunderwriting bclass?
5. bWhat bare bthe bproper bunderwriting bage band bdeath bbenefit bamount blimits bto bhelp
breach bthe bexpected bmorality bassumptions?
Administration b- bcorrect banswers✔✔Issues bto baddress: bsoftware, bforms band
bprocedures, bclaims, blegal band bcompliance, bpricing band bmarketing bmaterials
Product btypes b- bcorrect banswers✔✔Traditional bproducts
Interest bsensitive
Special bneed bproducts
COLI/BOLI
Optional bpolicy brider bbenefits
Main btraditional blife bproducts b- bcorrect banswers✔✔Whole blife band bTerm
Term blife binsurance b- bcorrect banswers✔✔provide bcoverage bfor ba bdefined bperiod bof
btime; bmust bdie bwithin bterm bperiod; bgenerally bno bsavings bor bcash bvalue
bcomponent; bhigher bthan bnormal breplacement blapse brates
Types bof bterm blife binsurance b- bcorrect banswers✔✔1. bLevel bterm
2. bDecreasing bterm
3. bincreasing bterm
Level bTerm b- bcorrect banswers✔✔maintain ba bconstant bdeath bbenefit bduring bthe bin
bforce bperiod
Decreasing bterm b- bcorrect banswers✔✔face bamount bdecrease bon bspecified
bschedule bover bthe bduration bof bthe bpolicy bbut bhe bpremiums bremain blevel
Increasing bterm b- bcorrect banswers✔✔face bamount bthat bincreases bover bthe
bcoverage bperiod, boften bat ba bset bpercentage brate bto breflect bsome bform bof binflation
Key bfeatures bto bhelp bmake bterm blife binsurance bvaluable b- bcorrect
banswers✔✔renewability band bconvertibility
Renewability b- bcorrect banswers✔✔allow bthe bpolicyholder bto brenew bthe bcoverage bat
bthe bend bof bthe binitial bperiod bfor bone bor bmore badditional bterm bperiods bwithout
bevidence bof binsurability
Products, Marketing And Distribution
Questions And Answers
Life binsurance b- bcorrect banswers✔✔a bcontract bthat bprotects bindividuals, bfamilies bor
bbusinesses bagainst bloss bof beconomic bvalue bupon binsured bdeath
CUPS b- bcorrect banswers✔✔Commission, bUnderwriting, bproducts band bservice
Customer bneeds b- bcorrect banswers✔✔1. bprotect band/or breplace beconomic bvalue
2. bpay boff binevitable blast bexpenses
3. bprovide bmeaningful bexecutive bbenefits
4. btransfer bassets befficiently
5. baccumulate btax-favored binvestment baccount b(cash bvalue baccount)
Product bdevelopment b- bcorrect banswers✔✔1. bPricing
2. bunderwriting
3. badministration
4. bmarketing
Pricing b- bcorrect banswers✔✔adequate bpremium blevels bsustain bthe bcompany,
bproviding ba bcomfortable bprofit bmargin bto ballow bgrowth band bto bweather beconomic
bbusiness bcycles bor bdisasters; bpremiums bmust bbe benough bto bcover beach brisk
bassumed
Major bcomponents bin bpricing b- bcorrect banswers✔✔1. bMortality
2. bExpenses
3. bInvestments
4. bProfit
Mortality b- bcorrect banswers✔✔represent bexpected bcost bof bpaying bthe bdeath bbenefit
bon bnumber bof bdeaths bwithin ban binsured bgroup bover ba bperiod bof btime
Expenses b- bcorrect banswers✔✔involves bthe bcost bto boperate bthe bcompany
Investments b- bcorrect banswers✔✔assumptions babout ba breasonable brate bof breturn
bthat bmust bbe bearned bto bensure bmonies bare bavailable bto bpay bfuture bclaims
, Profit b- bcorrect banswers✔✔seek bprofit blevel bas ba breturn bon binvestment bor ba
breturn bon bequity
New bbusiness band bunderwriting banalysis b- bcorrect banswers✔✔1. bdoes bthe
bapplication bask bthe bright bquestions
2. bif bnew bproduct, bhave bthe bappropriate bquestions bbeen badded bto bthe bapp?
3. bis bthe bproduct bdesigned b& bpriced bto ballow bsubstandard brisks bthe bopportunity bto
bpurchase bproduct bat ba bhigher bpremium?
4. bDoes bthe bproduct's bintro brequire ba bnew bunderwriting bclass?
5. bWhat bare bthe bproper bunderwriting bage band bdeath bbenefit bamount blimits bto bhelp
breach bthe bexpected bmorality bassumptions?
Administration b- bcorrect banswers✔✔Issues bto baddress: bsoftware, bforms band
bprocedures, bclaims, blegal band bcompliance, bpricing band bmarketing bmaterials
Product btypes b- bcorrect banswers✔✔Traditional bproducts
Interest bsensitive
Special bneed bproducts
COLI/BOLI
Optional bpolicy brider bbenefits
Main btraditional blife bproducts b- bcorrect banswers✔✔Whole blife band bTerm
Term blife binsurance b- bcorrect banswers✔✔provide bcoverage bfor ba bdefined bperiod bof
btime; bmust bdie bwithin bterm bperiod; bgenerally bno bsavings bor bcash bvalue
bcomponent; bhigher bthan bnormal breplacement blapse brates
Types bof bterm blife binsurance b- bcorrect banswers✔✔1. bLevel bterm
2. bDecreasing bterm
3. bincreasing bterm
Level bTerm b- bcorrect banswers✔✔maintain ba bconstant bdeath bbenefit bduring bthe bin
bforce bperiod
Decreasing bterm b- bcorrect banswers✔✔face bamount bdecrease bon bspecified
bschedule bover bthe bduration bof bthe bpolicy bbut bhe bpremiums bremain blevel
Increasing bterm b- bcorrect banswers✔✔face bamount bthat bincreases bover bthe
bcoverage bperiod, boften bat ba bset bpercentage brate bto breflect bsome bform bof binflation
Key bfeatures bto bhelp bmake bterm blife binsurance bvaluable b- bcorrect
banswers✔✔renewability band bconvertibility
Renewability b- bcorrect banswers✔✔allow bthe bpolicyholder bto brenew bthe bcoverage bat
bthe bend bof bthe binitial bperiod bfor bone bor bmore badditional bterm bperiods bwithout
bevidence bof binsurability
