LLQP Life insurance
250% rule - ANS-Beginning on the policy's 10th anniversary and every anniversary
thereafter, the accumulating fund on that anniversary date is compared to the accumulating
fund three years previous. If the value of the fund is 250% or more of the value of the fund
three years prior, the anti-dump-in provision will apply.
Accelerated death benefit - ANS-the insurance company will pay out a portion of the death
benefit prior to death of the life insured, if certain conditions are met
AD&D rider - ANS-A life insurance policy with an accidental death (AD) rider will provide an
extra benefit, over and above the regular death benefit, if the life insured dies as a result of
an accident.
Adjustable whole life - ANS-In contrast, an adjustable whole life insurance policy offers a
death benefit and premiums that the insurance company may adjust periodically to reflect its
actual experience.
adjusted cost basis - ANS-The adjusted cost basis (ACB) is the cost base of an insurance
policy for tax purposes. The ACB of an insurance policy generally changes over time and the
insurance company will usually provide the policyholder with this number when a taxable
disposition occurs
Anti dump in rule - ANS-A second rule, called the 250% rule or anti-dump-in rule, prevents
the policyholder from making large lump-sum deposits to the policy after its 7th anniversary.
This rule applies to both G2 and G3 policies
Capital needs approach - ANS-It is usually more beneficial to take a capital needs approach,
which identifies all of the income and capital needs arising as a result of death, and converts
them to a capitalized amount at death.
This approach starts by listing the surviving family's sources of income, then comparing them
with their expenses, to determine if a shortfall exists.
Collateralizing the CSV - ANS-using the CSV of a policy as collateral for a loan. When the
life insured dies, the lender recovers the amount of the cumulative loans from the death
benefit, with the remainder going to the beneficiaries.
Convertible Term Insurance - ANS-Convertible term insurance gives the policyholder the
option of converting the term policy to some form of permanent life insurance without proof
of insurability
CPP survivor benefits - ANS-If a person who has contributed to the Canada Pension Plan
dies, CPP survivor benefits may be payable to his estate, surviving spouse or dependent
children. These survivor benefits may include a death benefit, a survivor's pension and a
children's benefit. His estate, surviving spouse and children (or their guardians) must apply
for these benefits; they are not paid automatically.
Cross purchase agreement - ANS-With a cross-purchase buy-sell agreement, the other
owners agree to buy the interest of a deceased owner
death benefit taxation - ANS-The death benefit from a personally held life insurance policy is
exempt from tax.
Decreasing term death benefit - ANS-death benefit that decreases over the course of the
term, while the premium remains level. most often used by people who have mortgages.
, Dread disease benefit - ANS-The dread disease (DD) benefit allows the policyholder to
receive a benefit if the life insured is diagnosed with one of the conditions specified by the
contract
Exempt policy - ANS-If an insurance policy is an exempt policy, the policy's investment
account (i.e., often referred to as the accumulating fund) can grow on a tax-deferred or
tax-free basis.
Financial impact of death - ANS-Loss of income
Loss of caregiver
Debt repayment
Income taxes
Estate creation (education funds, legacies, charitable giving)
Business impacts
Fixed assets - ANS-Fixed assets include tangible property that could be sold to generate
cash.
G1 policy - ANS-G1 policies have extra tax advantages that are not available to newer
policies, so this should be carefully considered before replacing an older policy.
GIB rider - ANS-A guaranteed insurability benefit (GIB) rider gives the policyholder the
option to buy additional life insurance coverage in the future without providing proof of
insurability
group creditor insurance - ANS-The amount of the death benefit payable under group
creditor insurance is generally limited to the amount of the debt outstanding. If this is the
case, then the death benefit decreases as the debt is repaid.
Guaranteed whole life - ANS-A guaranteed whole life insurance policy offers a death benefit
and premiums that are guaranteed not to change over time
Income replacement approach - ANS-From an insurance perspective, income replacement
approach is reflected by the loss of employment income that would result from the death of
an income earner. This approach strives to replace that lost income and it assumes that as
long as this income can be replaced, the surviving family will not experience a reduction in
their standard of living.
Increasing term death benefit - ANS-death benefit increases over the course of the term.
The increase in the death benefit is usually applied at predetermined times, such as annually
or every five years. Premiums increase when the death benefit increases.
Indexed death benefit - ANS-The indexed death benefit option provides a death benefit
equal to the original face amount, indexed for some measure of inflation
Joint (First-to-Die) Life Insurance - ANS-A type of permanent life coverage that insures two
persons under one policy and that pays the death benefit when the first insured dies. Some
contracts give the surviving life insured the choice of continuing the same level of coverage
on their own life under a new policy without having to provide proof of insurability.
joint last to die - ANS-With a joint last-to-die life insurance policy, a single amount of
coverage is placed on two or more lives insured, and the death benefit is paid out upon the
death of the last person to die.
Level cost of insurance (LCOI) - ANS-For a UL policy based on LCOI, the cost per $1,000 at
risk generally remains constant over the duration of the policy
Level death benefit - ANS-Depending on the policy, the amount the beneficiary will receive
under this option will either:
- Remain constant at the original face amount, regardless of when the life insured dies
- Equal the policy's account value once it exceeds the original face amount.
250% rule - ANS-Beginning on the policy's 10th anniversary and every anniversary
thereafter, the accumulating fund on that anniversary date is compared to the accumulating
fund three years previous. If the value of the fund is 250% or more of the value of the fund
three years prior, the anti-dump-in provision will apply.
Accelerated death benefit - ANS-the insurance company will pay out a portion of the death
benefit prior to death of the life insured, if certain conditions are met
AD&D rider - ANS-A life insurance policy with an accidental death (AD) rider will provide an
extra benefit, over and above the regular death benefit, if the life insured dies as a result of
an accident.
Adjustable whole life - ANS-In contrast, an adjustable whole life insurance policy offers a
death benefit and premiums that the insurance company may adjust periodically to reflect its
actual experience.
adjusted cost basis - ANS-The adjusted cost basis (ACB) is the cost base of an insurance
policy for tax purposes. The ACB of an insurance policy generally changes over time and the
insurance company will usually provide the policyholder with this number when a taxable
disposition occurs
Anti dump in rule - ANS-A second rule, called the 250% rule or anti-dump-in rule, prevents
the policyholder from making large lump-sum deposits to the policy after its 7th anniversary.
This rule applies to both G2 and G3 policies
Capital needs approach - ANS-It is usually more beneficial to take a capital needs approach,
which identifies all of the income and capital needs arising as a result of death, and converts
them to a capitalized amount at death.
This approach starts by listing the surviving family's sources of income, then comparing them
with their expenses, to determine if a shortfall exists.
Collateralizing the CSV - ANS-using the CSV of a policy as collateral for a loan. When the
life insured dies, the lender recovers the amount of the cumulative loans from the death
benefit, with the remainder going to the beneficiaries.
Convertible Term Insurance - ANS-Convertible term insurance gives the policyholder the
option of converting the term policy to some form of permanent life insurance without proof
of insurability
CPP survivor benefits - ANS-If a person who has contributed to the Canada Pension Plan
dies, CPP survivor benefits may be payable to his estate, surviving spouse or dependent
children. These survivor benefits may include a death benefit, a survivor's pension and a
children's benefit. His estate, surviving spouse and children (or their guardians) must apply
for these benefits; they are not paid automatically.
Cross purchase agreement - ANS-With a cross-purchase buy-sell agreement, the other
owners agree to buy the interest of a deceased owner
death benefit taxation - ANS-The death benefit from a personally held life insurance policy is
exempt from tax.
Decreasing term death benefit - ANS-death benefit that decreases over the course of the
term, while the premium remains level. most often used by people who have mortgages.
, Dread disease benefit - ANS-The dread disease (DD) benefit allows the policyholder to
receive a benefit if the life insured is diagnosed with one of the conditions specified by the
contract
Exempt policy - ANS-If an insurance policy is an exempt policy, the policy's investment
account (i.e., often referred to as the accumulating fund) can grow on a tax-deferred or
tax-free basis.
Financial impact of death - ANS-Loss of income
Loss of caregiver
Debt repayment
Income taxes
Estate creation (education funds, legacies, charitable giving)
Business impacts
Fixed assets - ANS-Fixed assets include tangible property that could be sold to generate
cash.
G1 policy - ANS-G1 policies have extra tax advantages that are not available to newer
policies, so this should be carefully considered before replacing an older policy.
GIB rider - ANS-A guaranteed insurability benefit (GIB) rider gives the policyholder the
option to buy additional life insurance coverage in the future without providing proof of
insurability
group creditor insurance - ANS-The amount of the death benefit payable under group
creditor insurance is generally limited to the amount of the debt outstanding. If this is the
case, then the death benefit decreases as the debt is repaid.
Guaranteed whole life - ANS-A guaranteed whole life insurance policy offers a death benefit
and premiums that are guaranteed not to change over time
Income replacement approach - ANS-From an insurance perspective, income replacement
approach is reflected by the loss of employment income that would result from the death of
an income earner. This approach strives to replace that lost income and it assumes that as
long as this income can be replaced, the surviving family will not experience a reduction in
their standard of living.
Increasing term death benefit - ANS-death benefit increases over the course of the term.
The increase in the death benefit is usually applied at predetermined times, such as annually
or every five years. Premiums increase when the death benefit increases.
Indexed death benefit - ANS-The indexed death benefit option provides a death benefit
equal to the original face amount, indexed for some measure of inflation
Joint (First-to-Die) Life Insurance - ANS-A type of permanent life coverage that insures two
persons under one policy and that pays the death benefit when the first insured dies. Some
contracts give the surviving life insured the choice of continuing the same level of coverage
on their own life under a new policy without having to provide proof of insurability.
joint last to die - ANS-With a joint last-to-die life insurance policy, a single amount of
coverage is placed on two or more lives insured, and the death benefit is paid out upon the
death of the last person to die.
Level cost of insurance (LCOI) - ANS-For a UL policy based on LCOI, the cost per $1,000 at
risk generally remains constant over the duration of the policy
Level death benefit - ANS-Depending on the policy, the amount the beneficiary will receive
under this option will either:
- Remain constant at the original face amount, regardless of when the life insured dies
- Equal the policy's account value once it exceeds the original face amount.
