AD Banker Chapter 3 proctored test

face amount - ANSWERSthe amount stated in a life insurance policy to be paid upon death cash value - ANSWERSthe amount of money a whole life policyholder would receive if the policy were surrendered before death or maturity endows (matures) - ANSWERSwhen the cash value in the policy equals the face amount of the policy (and the insured is still living) rider - ANSWERSan added benefit attached to the policy that supplements existing coverage Term insurance - ANSWERStemporary life insurance protection for a specified period of time, that purchase strictly death benefits, and is less expensive than whole life insurance Level term policy - ANSWERSthe death benefit remains level and the premiums remain level during the policy term Decreasing term policy - ANSWERSdeath benefit decreases, but premiums remain level for the policy term ( usually used as mortgage protection) Increasing term policy - ANSWERSdeath benefit increases over the life of the policy while the premiums remain level Annually Renewable Term policy - ANSWERSis for one year, the death benefit remains level and the premiums increase yearly as the policy renews up to a specified age Return of Premium Term policy - ANSWERSequals a full refund of premiums if the insured is still living at the end of the term Renewable - ANSWERSA benefit that will renew the contract on the renewal date without evidence of insurability Convertible - ANSWERSThe right to convert the existing term policy to a permanent policy without evidence of insurability during the conversion period specified in the contract Ordinary whole life insurance - ANSWERS- Death Benefit is Fixed and guaranteed minimum - Premium is fixed - Insurer has all of the risk - Cash Value is guaranteed - Allows loans Straight Life whole policy (continuous premium) - ANSWERSThe premium is level and payable to age 100 or death of the insured, whichever comes first Limited Payment whole policy - ANSWERSPremium payments are for a specified time (20-Pay Life or 30-Pay Life) or to a specified age (Life Paid up at 65). The face amount (death benefit) remains level and cash value continues to earn interest and mature at age 100 Single Premium whole policy - ANSWERSThe entire premium is paid in a lump sum at the time of purchase and creates immediate cash value. The face amount (death benefit) remains level and cash value continues to earn interest and mature at age 100 corridor of insurance - ANSWERSprotection to keep the cash values of the policy from increasing too quickly which would cause the policy to mature (endow) prior to age 100 Universal Life Insurance (UL) - ANSWERS- Death Benefit is adjustable and guaranteed minimum - Two death benefit options - Premium is Flexible - Insurer has all of the risk - Cash Value is guaranteed minimum - Allows loans and partial surrenders Adjustable Face Amount - ANSWERSinsured can increase or decrease the face amount of the policy Flexible Premium - ANSWERSThe premiums can be increased, decreased, or even skipped at the policyowner's discretion as long as there is sufficient cash value to cover these deductions. Indexed Life - ANSWERSbase interest crediting on one or more "strategies" linked to the performance of a known stock or similar index (such as S&P 500), which is not under the control of the insurance company. There is no direct investment in any stocks or indexes. Variable whole life - ANSWERS- Death Benefit is Variable and guaranteed minimum - Premium is Fixed - Policyowner has all of the risk - Cash Value is not guaranteed - Loans available Variable Universal Life - ANSWERS- Death Benefit is Variable and adjustable - Two death benefit options - Premium is Flexible - Policyowner has all of the risk - Cash Value is not guaranteed - Allows loans and partial surrenders Joint Life (First to Die) - ANSWERScover 2 or more lives and the death benefit is paid upon the first insured to die and the policy terminates Joint Survivorship Life (Second to Die) - ANSWERScover 2 lives, and the death benefit is not paid until the last insured dies Waiver of Premium Rider - ANSWERSIf the insured becomes totally disabled, the insurer will waive premiums for the duration of the disability or the end of the policy, whichever occurs first Payor Benefit Rider - ANSWERSIf the payor (policyowner) dies or becomes disabled and is unable to make the premium payments, the insurer will waive the premium payments for a specified period of time (usually added on juvenile policies) Waiver of Monthly Deduction Rider - ANSWERSwaives the deduction of the monthly cost of insurance and expense charges associated with a Universal Life type policy while the insured is totally disabled, usually after 6 months of continuous disability. Usually, the disability must occur prior to 65, and if disabled, the rider typically terminates at age 65 Term Riders - ANSWERSmay be attached to any individual life policy to provide additional insurance protection for a fixed period of time Accidental Death Benefit (Double or Triple Indemnity) Rider - ANSWERSthe policy normally pays double or triple the face amount only if the insured's death was a result of an accident (may be called multiple indemnity rider, paying multiple times the face amount). The benefit is payable only if death occurs before a specific age and within 90 days of the accident Accidental Death and Dismemberment Rider - ANSWERS- provides a benefit in addition to the base of the policy - 100% of the amount of the rider upon accidental death. -If the insured suffers an accidental dismemberment loss, such as loss of a limb or eyesight, the rider pays 50% of the rider amount - Double dismemberment benefits (loss of 2 limbs or total eyesight) are provided at 100% of the rider. -Benefits of the rider are only payable if the loss is accidental and occurs within 90 days of the accident Guaranteed Insurability Rider - ANSWERSallows the insured to purchase stated amounts of additional insurance every 3 years based on certain ages (specifically 25, 28, 31, 34, 37, and 40), events, or specified dates without evidence of insurability up to a maximum age, usually 40 Return of Premium Rider - ANSWERSIf the insured dies within the term, the beneficiary will receive the face amount of the policy plus the benefit of the rider equaling the total amount of premiums paid Long-Term Care Rider - ANSWERSProvides up to 100% of the policy benefits if the insured qualifies for long-term care benefits as defined in the rider, Any payout is an acceleration of the life insurance death benefit, meaning it will reduce the ultimate death benefit payable to the beneficiary Viatical Settlement - ANSWERSan agreement between a third party (specializing in such transactions— viatical settlement provider) and a life insurance policyowner (viator) insuring the life of an individual with a life-threatening or terminal illness, normally with a life expectancy of 2 years or less Life Settlement - ANSWERSthe sale of an existing life insurance policy to a third party for more than its cash surrender value, but less than its death benefit. There is no requirement for the insured to be terminally ill in order for a life settlement to occur