Life Insurance Review Study Guide

These flashcards cover key concepts, definitions, and provisions related to life insurance as outlined in the provided notes.

What must exist at the time of application for a life insurance policy?

Insurable Interest.

What type of contract are life insurance policies often considered, with non-negotiable terms?

Contract of Adhesion.

What is an aleatory contract?

A contract where the performance of one or both parties is contingent upon the occurrence of a particular event.

What happens if an insurer accepts an incomplete application and issues a policy?

They must honor the contract.

What is a premium receipt?

A receipt given by a producer showing that coverage is in force immediately or based on certain conditions.

What is risk classification in underwriting?

Evaluating information on a life insurance application to determine the risk classification.

What is the Fair Credit Reporting Act (FCRA)?

An act requiring disclosure that an investigating consumer report may be obtained for a prospective insured.

What does the USA PATRIOT Act aim to detect?

Criminal activity, including money laundering.

What type of term policy guarantees the right to continue after the initial period?

Renewable Term Policy.

What does a convertible term policy allow?

Converting to a whole life policy without evidence of insurability.

What type of insurance provides permanent protection at the lowest annual premium?

Whole life insurance.

What does the waiver of premium provision guarantee?

The insurance company will pay premiums during a period of disability after a waiting period.

What is a key employee policy?

A policy that pays proceeds to the company if a key employee dies while the policy is in force.

What happens in a common disaster scenario?

Proceeds will be paid to the insured's estate if both insured and beneficiary die under specified conditions.

What is an accelerated death benefit provision?

Provides for advanced payment for life insurance benefits due to terminal illness.

What is a domestic company in insurance terms?

An insurance company incorporated and organized under the laws of the state it operates in.

What is a controlled business in the context of insurance?

When a producer earns more than 35% of commissions from sales to family members.

What must happen when the existing insurer is notified of a proposed replacement?

The existing insurer must be notified within five business days of receipt of a completed application.