1. Life Insurance(49)
1.1. Term
1.1.1. DIAL
1.1.1.1. D-Decreasing Term(Mortgage Loan)FA is decreasing until mortgage paid off-FA=0
1.1.1.2. I-Increasing Term, return of premium pol
1.1.1.3. A-Annual, Renewable Term(ART)Face Amount, cheapest premium@the 1st year; Trick ART is Level Term(It means FA same but premium keeps increasing)
1.1.1.4. L-Level Term 10,20,30 years-This is the most expensive Ins
1.1.2. Types
1.1.2.1. 1.Renewable: term-to-term (Guarantee and insurability-no matter what is your pre-conditions you can renew, but always increase in premium every time you renew, based on attended age, and also require a higher premium payable at each renewal)
1.1.2.2. 2.Convertible: term-to-perm, No CV becomes CV
1.2. Whole life(WELLS)
1.2.1. Pay 2 things but get only one Simple paid FA, Immediate CV, make one lumpsum, one time.
1.2.2. Whole-Straight Whole life, CV after 3-5 years, level premium will be paid until specific old age premium equal FA
1.2.3. E- Endowment means expensive, more pay
1.2.4. L- Limited pay=10 years pay life, 20 pay life or pay at 65
1.2.5. L- Limited benefit, certain case (Cancer Pol)
1.2.6. S-Single Premium FA, Immediate CV, level death benefit make one lumpsum payment, one time.
1.3. All Life & Health Ins must have
1.3.1. Pol Face, Condition, Premium, Ins Clause, Conditions
1.4. Family Policy
1.4.1. 1.Family Maintenance Pol. WH & Level-Always 20 years(Subtract the remain for instance paid premium15 years Beni get pay only 5 years left) 2. Family Income Pol
1.5. Universal
1.5.1. Universal Life Ins-combines a saving element along with the flexible premium option
1.5.1.1. 1.Life Ins=ART(Cheapest 1st year) then increasing-cost every year. Flexible premium 2.CV CASH withdrawal until zero Partial withdraw, do not borrow the money, Partial surrender Universal Life has 2 death benefits a) FA only or Level b) FA and CASH. Target Premium COI-Corridor of Ins--Tax Advantage 5. Joint Life Insurance Joint = Pay the death if 1st person dies, the 2nd insured will get paid Joint Survivor= Pay to 2nd person
1.6. Variable
1.6.1. Same as a whole Life Ins. Except insured can choose where CV can be invested.
1.7. Joint(Both)
1.7.1. Joint = Pay the death if 1st person dies, the 2nd insured will get paid Joint Survivor= Pay to 2nd person
1.8. Interest Sensitive Pol-CV can vary based on the company perform
1.9. Payor Benefit
1.9.1. Insured died or become disable, Waive premium until child becomes adult
1.10. Modified Life Ins
1.10.1. One time increasing then level to 100 called MO-Move One
1.10.2. Graded = step-up every time (Level up as a ladder)
1.11. Annuity
1.11.1. Objective
1.11.2. Pay Options
1.11.2.1. Annuity pay: 1. Immediate: less than 12 months 2. Deferred: withdrawal greater/longer than 12 months
1.11.3. Types
1.11.3.1. 1.Straight Life Ins. 2.Life Ins w/ period certain: Example: 20 years pol. paid premium 15 years already then insured died, another 5 years still get benefit until 20 years term meet and stop. 3.Life Ins w/ Refund Options: 3.1 Installment Refund 3.2 Refund in CASH immediately
1.11.4. Benefits
1.11.4.1. Fixed Interest
1.11.4.2. Variable
1.11.4.2.1. Variable annuity-backed by life ins separate account
1.11.4.3. Fixed & Link to Index Fund Investment
1.11.4.3.1. Annuity Index are not offer a maximum interest rate that increases annually Example: the features of equity-indexed annuities a. Offers long term inflation protection b. Offers a minimum guaranteed rate c. Offers protection during a decline in the stock market
1.12. Adjustable Life Ins-PCP
1.12.1. Change P-Plan Change C-Cover Period Change P-Premium Period
2. 1. Liquidate an estate (Pay off the debt) 2. Protect insured outliving (You live longer than age in pol, not die but ran out of money for living) 3. Accumulate your money 4. Growing tax deferred, no 10% penalty from IRS when withdrawal prior age 59.5 5. Guarantee interest rate: 1.Fixed example 6%-8% CV based on the company perform.2.Variable interest 3.The systematic liquidation of sum of money
3. Long-Term Care Insurance(4)
3.1. 1. When selling a long- term care ins. Rider to an applicant, a life agent must take into consideration all of these factors EXCEPT: Attending Physician’s statement 2. Bathing is considered an activity of daily living under the long-term care pol. 3. Inflation protection-Allow periodic increases in pol benefits. 4. How many "activities of daily living" must an insured be UNABLE to perform in order to meet the chronically ill requirements of a Long-Term Care policy? Minimum of two activities of daily living such a Bathing, and driving
4. Terminology
4.1. Premium
4.1.1. The money paid by the insured to acquire a policy's benefits.
4.2. Premium rate
4.2.1. A type of changes can be made to guaranteed renewable health ins pol. Premium rate considered: Mortality, Interest, Expenses, Materiality
4.3. Conservation
4.3.1. Life Agent tries to stop the replacement of an existing Life Ins Pol
4.4. Unilateral Contract
4.4.1. Only one party(insurer) make any kind of legally enforceable promise
4.5. Moral Hazard
4.5.1. Describes the increase in probability of a loss due to an insured's dishonest tendencies.
4.6. Non-Cancelable
4.6.1. Insurer cannot increase premium or cancel the policy to insured.
4.7. Reinsurance
4.7.1. A type of insurance where an insurer transfers loss exposures from policies written for its insureds.
4.8. Indemnity Contract
4.8.1. One that restores an injured party to the condition that was present before the loss.
4.9. Indemnity
4.9.1. Hospital confinement indemnity
4.9.1.1. pays a stated amount for each day an individual is hospitalized
4.10. Insuring Clause
4.10.1. The provision states in the health ins pol about kind of benefits provided and circumstances under which they will be paid.
4.11. ESOP
4.11.1. Employee Stock Ownership Plan
4.12. Intentional Concealment
4.12.1. Rescission of the contract
4.13. Deductible
4.13.1. Example-Major Medical Expense-A cost containment measured for an emergency hospital care
4.14. Substandard
4.14.1. A highest premium for Life Ins Classification
4.15. Hazard
4.15.1. A condition that may increase the chance of a loss resulting from a given cause of loss.
4.16. Life Agent
4.16.1. An individual who transacts life, disability, or Life and accident and health ins. On behalf of an insurer.
4.17. Endowment Ins
4.17.1. Pays the face amount if the insured survives to a specified period.
4.18. Mortality rate
4.18.1. Describes the number of deaths in a year vs number of people in a selected group
4.19. Incontestability clause/Period
4.19.1. The most life insurance policies prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed (2 years)
4.20. Free Look 30 days
4.20.1. Purpose to cancel w/ in the days before pol in force.
4.21. Materiality of Concealment Rule
4.21.1. The importance of a representation is demonstrated in.
4.22. Risk
4.22.1. The potential for loss, exposure to danger, uncertainty, chance, predictable, measurable etc. Only pure risk is insurable risk. Not probability-The amount an Ins Company must pay because of insurable event.
4.22.2. Speculative(high risk loss) Risk=Gambling
4.23. Underwriting
4.23.1. The process that insurer will determine whether to issue pol to prospect or not.
4.24. Grace Period
4.24.1. Time period allows an insured’s life ins pol to remain in force (still coverage) even if the premium was not paid on the due date. This is assisted Pol owner from unintentional lapse of the contract. If insured dies during this period, still payable but deduct premium that over due.
4.25. Loss
4.25.1. An insurable event that takes place w/ results in a payment made by Ins. Company. Loss is unintentional decrease in the value of an asset due to a peril. Not probability
4.26. Lump-Sum
4.26.1. Automatic mode of settlement for life insurance policy
4.27. Morbidity
4.27.1. Describes the frequency and severity of certain illnesses and accidents
4.28. Life Broker
4.28.1. Represents an Individual wanting to sell their life policy to a third party.
4.29. Ins Solicitor
4.29.1. Anyone employed in CA to assist an insurance agent in transacting insurance.(Similar to Life Agent but different in responsibility)
4.30. Admitted carrier
4.30.1. An ins. Company entitled to transact business in CA
4.31. Permissiveness
4.31.1. May
4.32. Coinsurance
4.32.1. After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses.
5. Social Security Benefit & General Concept of Medical and Disability Insurance(4)
5.1. A worker is entitled to receive SS Disability Benefits when -Worker is under age 65(Beyond 65 is Medicare) -Work is insured for disability benefits -Disability is expected to continue for 12 months or result in death EXCEPT for worker cannot perform his or her current job, but is actively seeking other employment
5.2. Disable Worker will receive No Limit time under Worker's Compensation Medical Expense Benefits.
5.3. 1.Non-contributory group health plan-Eligible employees must participate 100% 2.An employee for ABC Corp is injured on the job. He/she will get pay from "Workers ‘Compensation"
5.3.1. SS is not eligible to a deceased worker’s dependent parents of any age
6. Q&A Life Ins(9)
6.1. Q&A in Life Ins session: 1) Non-medical life ins, still required to answer medical questions on the application. 2) Life Ins Pol limit of liability is FA of pol. 3) Employee has not to provide proof of insurability once employer terminated (to exercise the conversion privilege). Ex-employee must pay premium for the converted policy, and it must take place w/ in 31 days. 4) Group Life Ins: COI, Conversion Privilege, Master Pol 5) Participating Life Ins Pol=Contract that allows the policyowner to receive a share of surplus in the form of policy dividends 6) Accidental death rider, If an insured dies because of an accident, the rider will provide additional coverage. 7) Life Ins creates an immediate estate means when the insured dies, a death benefit is paid. 8. Key person ins-cover business losses due to the death of a key employee. 9) When calculating life ins. Premium rates, which component would an agent’s commission fall under INSURER’s EXPENSES
7. the Securities Act of 1933
7.1. Registration by coordination is used to coordinate state and federal registration
7.2. USA-Securities that are issued by REITs not exempt from State Registration USA-Qualification does not require registration with the SEC
8. General Insurance(40)
8.1. Benefits
8.1.1. -Reduces the uncertainty of loss exposures -Makes a loss whole again -Source of investment funds -Ins is not eliminate the Risk
8.2. MEC
8.2.1. MEC =Modified Endowment Contract will be 10% tax penalty when taking a loan against this pol prior age 59 ½ MEC had been written after 1988 that fails to pass the 7-pay test
9. Disability Income Insurance(4)
9.1. Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. He is unable to work 90 days following an automobile accident. What will the policy pay? $5,000 due to benefits will kick in after 30 days.
9.2. Serve the same as a deductible=Elimination Period
10. CA CDI
10.1. FMLA-12 Weeks Unpaid for Maternity Leave
10.2. Life Agent vs Broker vs Solicitor
10.3. PCIP-Created by CA to help local who has been rejected from private health insurers due to pre-existing conditions.
10.4. MRMIP-For CA Resident only
10.4.1. Major Risk Medical Insurance Program
10.5. Lance Manyon Insurance Services
10.5.1. The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation
10.6. Life Agent License Renewal
10.6.1. 1: Complete California Insurance License Continuing Education 2: Apply for California Insurance License Renewal 3.Pay the California Insurance License Renewal Fee (Pay the renewal fees via Sircon or NIPR by credit card $188)