Life insurance terms- MUST KNOW
Call Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt Play1/32
There's no tags or description
Looks like no tags are added yet.
Name | Mastery | Learn | Test | Matching | Spaced | Call with Kai |
|---|
No analytics yet
Send a link to your students to track their progress
33 Terms
Group life conversion period
31 days to convert to an individual policy after group coverage ends
Grace period for monthly premiums
31 days
IRA rollover period
60 days
Penalty-free IRA withdrawal age
59½
Social Security disability elimination period
5 months
COBRA employer size
20 or more employees
Medicare Supplement open enrollment
Begins at age 65 when enrolled in Medicare Part B
Life insurance backdating limit
Usually 6 months to save age
Contestable period
Usually 2 years
Incontestable clause
After the contestable period, insurer has limited ability to deny claims for misstatements
Death during grace period
Claim is paid minus overdue premium
Death after grace period if policy lapsed
Claim is denied
Reinstatement requirement
Usually requires evidence of insurability, overdue premiums, and interest
Policy loan at death
Loan plus unpaid interest is deducted from the death benefit
Nonforfeiture options
Three main options: cash surrender, reduced paid-up, extended term
Dividend options
Main options: cash, reduce premium, accumulate at interest, paid-up additions, one-year term
Settlement options
Main options: lump sum, fixed amount, fixed period, life income, interest only
Universal Life Option A
Level death benefit
Universal Life Option B
Increasing death benefit
Joint life
Pays at the first death
Survivorship life
Pays at the last death
Straight life annuity
Highest payout option, but payments stop at death
Life with period certain
Pays for life but guarantees payments for a minimum period
Fixed annuity
Insurer takes the investment risk
Variable annuity
Owner takes the investment risk
1035 exchange
Tax-free exchange of life insurance, annuity, or endowment contract
MEC tax treatment
Withdrawals and loans are taxed like distributions and may face penalty
Life insurance death benefit
Usually income-tax free to the beneficiary
Dividends
Usually not taxable because they are considered return of premium
Dividend interest
Taxable
Policy loans
Usually not taxable if the policy stays active
Traditional IRA distributions
Taxable as ordinary income
Roth IRA qualified withdrawals
Tax-free