Policy Types
What type of life insurance has no cash value and expires after a set term?
Term Life
What rider waives the premium if the insured becomes disabled?
Waiver of Premium
Who must sign the life insurance application?
Applicant and agent
What is twisting?
Misrepresenting a policy to replace another one
Are life insurance death benefits taxable?
No, generally tax-free
What type of policy offers fixed premiums and guaranteed cash value?
Whole Life
What rider pays out double the death benefit if death is accidental?
Accidental Death Rider
What is the MIB and what does it do?
Medical Information Bureau; helps underwriters detect fraud
What is rebating?
Offering something of value to induce the sale
What is a 1035 exchange?
Tax-free transfer of cash value between policies
Which policy allows flexible premiums and a death benefit that can change?
Universal Life
What provision gives the insured a set number of days to cancel for full refund?
Free Look Period
What document begins conditional coverage before underwriting is complete?
Conditional Receipt
How long is the Free Look Period in most states?
10 days
When are withdrawals from a qualified retirement plan taxed?
When money is withdrawn (ordinary income tax)
What type of policy requires a securities license to sell?
Variable Life
What is the purpose of the Incontestability Clause?
Prevents insurer from voiding policy after 2 years (except for fraud)
When must insurable interest exist?
At the time of application
How often must insurance licenses typically be renewed?
Every 2 years
Is cash value growth taxed each year?
No, it grows tax-deferred
What’s the main difference between Renewable and Convertible Term?
Renewable = continue without proof of insurability; Convertible = convert to permanent
What is the Grace Period in most life insurance policies?
30 days
What are the agent's duties during policy delivery?
Collect premium (if not already collected), obtain delivery receipt, explain policy
What does the Guaranty Association do?
Protects policyholders if an insurer becomes insolvent (within limits)
What type of retirement plan is funded with after-tax dollars?
Nonqualified Plan