Life & Health Insurance Exam Colorado
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1. Traditional Whole -Ordinary (Straight) Life
Life -Limited-Pay & Single-Premium Whole Life
-Adjustable Whole Life
2. Ordinary (Straight) -Until 100 or Death, whichever comes first
Life -Permanent Protection
-Rates & benefits based on law of large numbers (Mortality Rate)
-Guaranteed, tax-deferred interest rate
-Premium level, company's risk goes down as cash value goes up
-Insurer keeps the cash value if death to offset risk
-Lowest net cost in long run
-Client has access to cash through cash surrender or policy loan
-Rates are per unit of protection (1,000 is 1 unit)---TEST
-Cash value is guaranteed
-Cash value will equal face amount at policy maturity
3. Limited-Pay & -Premium paying period is shorter
Single-Premium -Cash value still equals face amount at age 100
Whole Life -20 pay life will be paid up in 20 years PL
-Life Paid up at age 65, will be paid up at 65 LP
-A single premium policy will have an immediate cash value (1-pay life)---TEST
4. Adjustable Whole -Sold to clients with fluctuating incomes----TEST
Life----TEST -Combination of term and whole life----TEST
-Coverage may not be increased without physical exam---TEST
5. Interest/Market -Universal Whole life
Sensitive Whole -Variable Whole life
Life Products -Variable/Universal Whole life
-Equity-Indexed Life
6. Universal Whole -Guaranteed minimum interest rates
life -Extreme flexibility regarding premium PMTs----TEST
, Life & Health Insurance Exam Colorado
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-Most flexible product
-Target premium based on projected earnings
-Option A UL has level death benefits
-Option B UL will pay beneficiary both face amount + cash value
7. Variable Whole life -Cash value deposited into a separate account
-Requires FINRA series 6 or 7 to sell
-Used to be called NASD
-Regulated by SEC
-Regulated by FINRA (Financial Industry Regulatory Authority)
-NYSE license not required
-Minimum death benefit (face amount) is guaranteed---TEST
-Has fixed premium---TEST
8. Variable/Universal -Requires Finra(series 6 or 7) licenses to sell
Whole life -Allows client to self-direct cash values into sub-account---TEST
-Flexible premium
9. Equity-Indexed -cash value, where minimum death benefit is guaranteed as well as the mini-
Life mum earning on the cash value in the general account
-Securities license is not required
-Fixed Premium
10. Term Life -Level Term
-Decreasing Term
-Increasing Term
11. General Features -Premium goes up every year
of Term Insurance -May be converted to whole life at current attained age regardless of health
-May be renewable up to certain age without physical
12. Level Term Both premium and face amount are level for period of time
, Life & Health Insurance Exam Colorado
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13. Decreasing Term -Face amount goes down but premium remains the same
-Usually convertible to whole life regardless of health
-Premium stays the same but cost increases as face amount decreases
14. Increasing Term -Face amount goes up instead of down
-Allows beneficiary to receive the face amount + premiums or cash values
-Also known as Universal Life option B
15. Special features of -Renewable/Convertible to whole up to certain date or age regardless of
Term Insurance health
-Conversion based on current age
-May only convert to more expensive option
-Cannot convert to term
-Cannot convert to more coverage than you have
16. Return of Premi- The premium for a return of premium policy is generally more than that for a
um under Term term policy, but less than that of a traditional whole life policy
17. General Features -Always have beneficiary during the pay-in or accumulation period
of Annuities -May or may not have a beneficiary during the pay-out or annuity period
-During pay-out period all Pmt's are for the life of the annuitant
-Long-term investments subject to 10% early withdrawal penalties on with-
drawals taken prior to 59.5
-Immediate annuities have no pay-in or accumulation period--single premium
-Variable annuities use a separate account (Like Mutual fund)
-Have 30-day grace period
18. Annuity Pay-Out -Contractual; cannot be changed once selected
Options -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
Study online at https://quizlet.com/_2v47sq
1. Traditional Whole -Ordinary (Straight) Life
Life -Limited-Pay & Single-Premium Whole Life
-Adjustable Whole Life
2. Ordinary (Straight) -Until 100 or Death, whichever comes first
Life -Permanent Protection
-Rates & benefits based on law of large numbers (Mortality Rate)
-Guaranteed, tax-deferred interest rate
-Premium level, company's risk goes down as cash value goes up
-Insurer keeps the cash value if death to offset risk
-Lowest net cost in long run
-Client has access to cash through cash surrender or policy loan
-Rates are per unit of protection (1,000 is 1 unit)---TEST
-Cash value is guaranteed
-Cash value will equal face amount at policy maturity
3. Limited-Pay & -Premium paying period is shorter
Single-Premium -Cash value still equals face amount at age 100
Whole Life -20 pay life will be paid up in 20 years PL
-Life Paid up at age 65, will be paid up at 65 LP
-A single premium policy will have an immediate cash value (1-pay life)---TEST
4. Adjustable Whole -Sold to clients with fluctuating incomes----TEST
Life----TEST -Combination of term and whole life----TEST
-Coverage may not be increased without physical exam---TEST
5. Interest/Market -Universal Whole life
Sensitive Whole -Variable Whole life
Life Products -Variable/Universal Whole life
-Equity-Indexed Life
6. Universal Whole -Guaranteed minimum interest rates
life -Extreme flexibility regarding premium PMTs----TEST
, Life & Health Insurance Exam Colorado
Study online at https://quizlet.com/_2v47sq
-Most flexible product
-Target premium based on projected earnings
-Option A UL has level death benefits
-Option B UL will pay beneficiary both face amount + cash value
7. Variable Whole life -Cash value deposited into a separate account
-Requires FINRA series 6 or 7 to sell
-Used to be called NASD
-Regulated by SEC
-Regulated by FINRA (Financial Industry Regulatory Authority)
-NYSE license not required
-Minimum death benefit (face amount) is guaranteed---TEST
-Has fixed premium---TEST
8. Variable/Universal -Requires Finra(series 6 or 7) licenses to sell
Whole life -Allows client to self-direct cash values into sub-account---TEST
-Flexible premium
9. Equity-Indexed -cash value, where minimum death benefit is guaranteed as well as the mini-
Life mum earning on the cash value in the general account
-Securities license is not required
-Fixed Premium
10. Term Life -Level Term
-Decreasing Term
-Increasing Term
11. General Features -Premium goes up every year
of Term Insurance -May be converted to whole life at current attained age regardless of health
-May be renewable up to certain age without physical
12. Level Term Both premium and face amount are level for period of time
, Life & Health Insurance Exam Colorado
Study online at https://quizlet.com/_2v47sq
13. Decreasing Term -Face amount goes down but premium remains the same
-Usually convertible to whole life regardless of health
-Premium stays the same but cost increases as face amount decreases
14. Increasing Term -Face amount goes up instead of down
-Allows beneficiary to receive the face amount + premiums or cash values
-Also known as Universal Life option B
15. Special features of -Renewable/Convertible to whole up to certain date or age regardless of
Term Insurance health
-Conversion based on current age
-May only convert to more expensive option
-Cannot convert to term
-Cannot convert to more coverage than you have
16. Return of Premi- The premium for a return of premium policy is generally more than that for a
um under Term term policy, but less than that of a traditional whole life policy
17. General Features -Always have beneficiary during the pay-in or accumulation period
of Annuities -May or may not have a beneficiary during the pay-out or annuity period
-During pay-out period all Pmt's are for the life of the annuitant
-Long-term investments subject to 10% early withdrawal penalties on with-
drawals taken prior to 59.5
-Immediate annuities have no pay-in or accumulation period--single premium
-Variable annuities use a separate account (Like Mutual fund)
-Have 30-day grace period
18. Annuity Pay-Out -Contractual; cannot be changed once selected
Options -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
