CIC - Life & Health Exam Life
Insurance & Annuities Concepts
Questions & Answers22
General Uses of Life Insurance (6) - ANSWERS-- Protect Your Clients
- Create an Estate (Provides a Lump Sum of Cash)
- Protect a Business from the Loss of a Key Person
- Final Expenses
- Replace Lost Income
- Create or Supplement a Retirement Fund
3 Items that Make Up the Legal Element of a Life Insurance Contract - ANSWERS-- Agreement
(Offer; Acceptance; Consideration {premium})
- Competent Parties (Parties Must have Legal Capacity to Enter into the Contract)
- Legal Purpose (Must be an Insurable Interest @ Time of Application)
6 Steps to Implement During the Planning Phase - ANSWERS-1. Identify Issues by gathering
information via a fact finder discussion
2. Assign priorities establishing goals and objectives
3. Analyze the information and suggest solutions and a plan
4. Develop plan with client involvement
5. Implement the plan/solution
6. Periodically repeat the process to monitor & revise as needed
3 Ways to Determine the Proper Amount of Life Insurance - ANSWERS-1. Total Needs Analysis
,2. Multiple of Gross Earning Method
3. Scientific Guess Method
Total Needs Analysis - ANSWERS-Method determines the present & future funds necessary to
accomplish certain financial goals / income needs and required in-depth questioning on the part
of the agent
Disadvantages of Using Total Needs Analysis - ANSWERS-- Time-Consuming
- Results Can Be Overwhelming
- Client May Be Reluctant to Share Information
Advantages of Using Total Needs Analysis - ANSWERS-- More Realistic Numbers
- Client Involvement
Multiple of Gross Earning Method - ANSWERS-Uses the Pre-tax Annual Earnings and multiplies
them by a factor such as 6,8, or some other number
Advantages of Using Multiple of Gross Earning Method - ANSWERS-- Quick and simple for the
agent
- Easy to understand for the client
Disadvantages of Using Multiple of Gross Earning Method - ANSWERS-- Less accurate than total
needs analysis method
- Large mortgages, loans and other special considerations may not be accounted for
- Social security benefits are not included
- Current-in-force policies are not considered
Advantages of Using Scientific Guess Method - ANSWERS-Quick, simple & easy to understand
, Disadvantages of Using Scientific Guess Method - ANSWERS-Tends to be the least accurate
approach of the 3 methods
5 Types of Life Insurance Contracts - ANSWERS-1. Term Insurance
2. Whole Life
3. Limited Payment Contracts
4. Universal Life
5. Group Term Life
Term Insurance - ANSWERS-Insurance for a term of time of temporary period
Term Insurance Characteristics - ANSWERS-- Face amount payable only if death occurs during
stipulated years
- protection is only for a limited # of years
- Pays nothing if insured lives past the end of the term coverage period
Term Insurance Purpose and Use - ANSWERS-- Identifiable of Specific Need (Mortgage or Loans)
- Often sold when the need is great, but the money is little
- **Protects future insurability if converted **
Features and Advantages of Term Insurance - ANSWERS-- Easy for Buyer to Understand
- May be renewable and/or convertible
- Initial Low cost
- Return of Premium
Disadvantages of Term Insurance - ANSWERS-- No Cash Value
Insurance & Annuities Concepts
Questions & Answers22
General Uses of Life Insurance (6) - ANSWERS-- Protect Your Clients
- Create an Estate (Provides a Lump Sum of Cash)
- Protect a Business from the Loss of a Key Person
- Final Expenses
- Replace Lost Income
- Create or Supplement a Retirement Fund
3 Items that Make Up the Legal Element of a Life Insurance Contract - ANSWERS-- Agreement
(Offer; Acceptance; Consideration {premium})
- Competent Parties (Parties Must have Legal Capacity to Enter into the Contract)
- Legal Purpose (Must be an Insurable Interest @ Time of Application)
6 Steps to Implement During the Planning Phase - ANSWERS-1. Identify Issues by gathering
information via a fact finder discussion
2. Assign priorities establishing goals and objectives
3. Analyze the information and suggest solutions and a plan
4. Develop plan with client involvement
5. Implement the plan/solution
6. Periodically repeat the process to monitor & revise as needed
3 Ways to Determine the Proper Amount of Life Insurance - ANSWERS-1. Total Needs Analysis
,2. Multiple of Gross Earning Method
3. Scientific Guess Method
Total Needs Analysis - ANSWERS-Method determines the present & future funds necessary to
accomplish certain financial goals / income needs and required in-depth questioning on the part
of the agent
Disadvantages of Using Total Needs Analysis - ANSWERS-- Time-Consuming
- Results Can Be Overwhelming
- Client May Be Reluctant to Share Information
Advantages of Using Total Needs Analysis - ANSWERS-- More Realistic Numbers
- Client Involvement
Multiple of Gross Earning Method - ANSWERS-Uses the Pre-tax Annual Earnings and multiplies
them by a factor such as 6,8, or some other number
Advantages of Using Multiple of Gross Earning Method - ANSWERS-- Quick and simple for the
agent
- Easy to understand for the client
Disadvantages of Using Multiple of Gross Earning Method - ANSWERS-- Less accurate than total
needs analysis method
- Large mortgages, loans and other special considerations may not be accounted for
- Social security benefits are not included
- Current-in-force policies are not considered
Advantages of Using Scientific Guess Method - ANSWERS-Quick, simple & easy to understand
, Disadvantages of Using Scientific Guess Method - ANSWERS-Tends to be the least accurate
approach of the 3 methods
5 Types of Life Insurance Contracts - ANSWERS-1. Term Insurance
2. Whole Life
3. Limited Payment Contracts
4. Universal Life
5. Group Term Life
Term Insurance - ANSWERS-Insurance for a term of time of temporary period
Term Insurance Characteristics - ANSWERS-- Face amount payable only if death occurs during
stipulated years
- protection is only for a limited # of years
- Pays nothing if insured lives past the end of the term coverage period
Term Insurance Purpose and Use - ANSWERS-- Identifiable of Specific Need (Mortgage or Loans)
- Often sold when the need is great, but the money is little
- **Protects future insurability if converted **
Features and Advantages of Term Insurance - ANSWERS-- Easy for Buyer to Understand
- May be renewable and/or convertible
- Initial Low cost
- Return of Premium
Disadvantages of Term Insurance - ANSWERS-- No Cash Value
