Types of Life Insurance
Which type of life policy has a level premium and death benefit over the course of insured's entire life?
Whole Life
What is the contestability period for a life insurance policy?
If insured dies within the first 2 years the insurance company can investigate for misrepresentation and deny death benefit payout if initial application is found to be inaccurate.
What rider on a life policy doubles the death benefit in the event insured dies in an accident?
Accidental death rider?
What type of Underwriting asks no health questions?
Guaranteed Issue
What happens if someone outlives the term on a term life policy?
It will expire or they can choose the pay the very high premium based off their current age
Which type of life policy is intended to cover funeral expense?
Final Expense
Name 3 reasons someone would buy life insurance.
Funeral costs, legacy, income replacement, mortgage protections, debt, tax free benefit, charity/church donations
What is the rider called that allows insured to access the death benefit while still living?
Accelerated death benefit?
What is Simplified Underwriting?
Health questions and MIB/Script check only
How does the cash value in a whole life policy grow?
A portion of the insured's premiums goes towards the cash value account and grows with a fixed interest rate.
Which type of life policy does NOT produce a cash value?
Term
What are the 2 types of beneficiaries listed on a life insurance policy?
Primary & Contingent
What does the Guaranteed Insurability Rider do?
Allows insured to increase the coverage at a higher premium, but is not required to go through the underwriting process again, even if they're health has declined.
What is the difference between a graded death benefit and an immediate death benefit?
A graded death benefit you have to wait 2 years before beneficiaries will receive full death benefit amount while immediate has no waiting period and will receive full death benefit at anytime upon insureds death
How does the cash value in a Indexed Universal Life policy grow?
A portion of the insured's premiums goes towards the cash value account and grows based off the performance of market indexes, but is not invested directly into the stock market like variable UL are.
What type of Life Insurance policy has flexible premiums?
Universal Life
True or False: The beneficiary is still subject to pay taxes on the death benefit paid out through a life insurance policy.
False...Life insurance benefits are TAX FREE
True or False: All life insurance policies come with built in riders that don't cost anything.
False..some polices come with built in riders that have no cost, but many policies don't have built in riders at no cost. But instead have optional riders that are added to the premium amount.
Name 2 common conditions that are usually declined for life insurance.
Cancer, heart attack (major heart conditions), stroke, kidney/liver failure, HIV/AIDS, most neurological disorders, diabetic complications, severe mental health conditions, COPD/severe lung disorders, and substance abuse etc.
What happens if the beneficiary listed on the policy is deceased?
If no other beneficiaries are listed, the death benefit will go the insured's estate and will be subject to probate
What would make a Universal Life policy lapse?
Cash value runs out
What happens if an insured passes away with outstanding policy loans?
Any outstanding balance and incurred interest will deduct from the policies death benefit before paying out to the beneficiaries
What is the rider called that if insured becomes totally disabled, they are not responsible to make premium payments after the specified waiting period?
Waiver of premium rider
Name another reason someone would be declined for life insurance, other than medical history?
Height/weight, risky occupations/hobbies, driving record, and criminal history
What does MEC stand for?
Modified Endowment Contract