Siah's Maryland Life Insurance Flashcards

What is whole life insurance?

Permanent coverage with fixed premiums and guaranteed cash value.

What is universal life insurance?

Flexible permanent coverage with adjustable premiums and benefits.

What is variable life insurance?

Permanent coverage with investment-driven cash value.

What is group life insurance?

Term coverage through an employer or organization.

What is convertible term insurance?

Term policy convertible to permanent without new underwriting.

What is renewable term insurance?

Term policy renewable without new evidence of insurability.

What is a level term policy?

Fixed premiums and death benefit for the term.

What is a decreasing term policy?

Death benefit decreases over time

What is variable universal life?

Combines universal life flexibility with investment options.

What is an endowment policy?

Pays a benefit at a specified age or upon death

What is the cash value in permanent life insurance?

Savings component that grows over time.

What is a single premium whole life policy?

Permanent coverage purchased with one lump-sum payment.

What is a limited-pay whole life policy?

Premiums paid for a limited period

What is a graded premium whole life policy?

Premiums start low and increase over time.

What is an adjustable life policy?

Allows changes to premiums

What is a family income policy?

Combines term and whole life to provide income for a period after death.

What is a juvenile life insurance policy?

Coverage for a child

What is a return of premium term policy?

Refunds premiums if the insured survives the term.

What is the difference between participating and non-participating policies?

Participating policies pay dividends; non-participating do not.

What is a joint life policy?

Covers two lives

Life Insurance Policy Provisions

Options

What is a grace period provision?

30 days to pay overdue premiums without lapse.

What is an accelerated death benefit rider?

Pays part of the death benefit early for terminal illness.

What is a waiver of premium rider?

Waives premiums if the insured becomes disabled.

What is an automatic premium loan provision?

Uses cash value to pay overdue premiums to prevent lapse.

What is a nonforfeiture option?

Options (cash surrender

What is a dividend option?

Choices for dividends: cash

What is a paid-up additions rider?

Uses dividends to buy additional coverage.

What is a guaranteed insurability rider?

Allows additional coverage at set intervals without underwriting.

What is a settlement option?

How death benefits are paid (e.g.

What is an assignment provision?

Allows transfer of policy rights to another party.

What is a cost-of-living adjustment (COLA) rider?

Increases the death benefit to account for inflation.

What is a long-term care rider?

Allows access to the death benefit for long-term care expenses.

What is an accidental death benefit rider?

Pays an additional benefit if death is accidental.

What is a spouse rider?

Provides term coverage for the insured’s spouse.

What is a children’s term rider?

Provides term coverage for the insured’s children.

What is a policy exclusion?

A condition or event not covered

What is a reinstatement requirement?

Proof of insurability and payment of back premiums with interest.

What is a policy loan interest rate?

The rate charged on borrowed cash value

What is a fixed amount settlement option?

Death benefit paid in equal installments over time.

What is a fixed period settlement option?

Death benefit paid over a specified period.

What is a qualified retirement plan?

Meets IRS rules for tax-deferred growth and deductible contributions.

What is a defined benefit plan?

Guarantees a specific retirement benefit based on a formula.

What is a defined contribution plan?

Retirement benefit depends on contributions and investment returns.

What is a 401(k) plan?

Employee-funded plan with pre-tax contributions and possible employer match.

What is the 2025 401(k) contribution limit?

$23

What is a 403(b) plan?

A 401(k)-like plan for nonprofit employees.

What is an IRA?

Individual Retirement Account with tax-deferred or tax-free growth.

What is a Roth IRA?

After-tax contributions with tax-free qualified withdrawals.

What is vesting in a qualified plan?

Earning full ownership of employer contributions over time.

What is a rollover?

Tax-free transfer of funds between qualified plans.

What is the penalty for early withdrawal from a qualified plan?

10% on taxable portion before age 59

What is an exception to the early withdrawal penalty?

Withdrawals for first-time home purchase

What is a required minimum distribution (RMD)?

Mandatory withdrawals from qualified plans starting at age 73.

What is a SEP IRA?

Simplified Employee Pension for self-employed or small businesses.

What is a SIMPLE IRA?

Savings Incentive Match Plan for small businesses.

What is a profit-sharing plan?

Employer contributions based on company profits.

What is ERISA?

Employee Retirement Income Security Act

What is a plan fiduciary?

Manages a qualified plan in participants’ best interests.

Are employer contributions to a 401(k) taxable?

No

What is the tax benefit of a traditional IRA?

Contributions may be deductible

What is a catch-up contribution?

Extra contributions allowed for those 50+ in qualified plans.

What is a 457 plan?

Deferred compensation plan for government and nonprofit employees.

What is a qualified domestic relations order (QDRO)?

Court order to divide qualified plan assets in a divorce.

What is a Roth 401(k)?

A 401(k) with after-tax contributions and tax-free withdrawals.

What is a non-elective contribution?

Employer contributions to a qualified plan regardless of employee contributions.

What is the role of a life insurance beneficiary designation?

Specifies who receives the death benefit.

What is a revocable beneficiary?

A beneficiary the policyowner can change without consent.

What is an irrevocable beneficiary?

A beneficiary who cannot be changed without their consent.

What is a suicide clause in life insurance?

Excludes coverage for suicide within the first 2 years.

What is a misstatement of age provision?

Adjusts the death benefit if the insured’s age was misstated.

What is the purpose of a viatical settlement?

Allows a terminally ill insured to sell their policy for immediate cash.

What is a life settlement?

Sale of a policy to a third party for more than cash value but less than death benefit.

What is a guaranteed minimum income benefit (GMIB)?

An annuity rider ensuring a minimum income regardless of market performance.

What is a guaranteed minimum accumulation benefit (GMAB)?

An annuity rider guaranteeing a minimum account value.

What is a qualified longevity annuity contract (QLAC)?

A deferred annuity in a qualified plan to delay RMDs.

What is the tax treatment of a QLAC?

Premiums are excluded from RMD calculations up to a limit.

What is a risk classification in underwriting?

Categorizing applicants as standard

What is a substandard risk?

Higher-than-average risk

What is a preferred risk?

Lower-than-average risk

What is a medical exam in underwriting?

A health assessment to determine insurability.

What is a paramedical exam?

A simplified health exam for underwriting purposes.

What is the purpose of a policy illustration?

Shows projected premiums

What is a replacement disclosure in Maryland?

A form comparing the existing and proposed policies in a replacement sale.

What is the role of the NAIC?

National Association of Insurance Commissioners

What is a policy summary?

A document outlining key policy features and costs.

What is a buy-sell agreement funded by life insurance?

Funds a business partner’s buyout upon an owner’s death.

What is key person insurance?

Life insurance on a critical employee to protect the business.

What is a split-dollar life insurance plan?

Premiums split between employer and employee

What is a group term carve-out plan?

Provides additional life insurance for key employees outside group coverage.

What is the purpose of a policy rider?

Customizes or enhances coverage for specific needs.

What is a policy lapse?

Termination due to nonpayment of premiums.

What is a premium mode?

The frequency of premium payments (e.g.

What is a policy dividend?

A refund of excess premiums in participating policies.

What is a non-participating policy?

A policy that does not pay dividends.

What is a policy reserve?

Funds set aside by the insurer to pay future claims.

What is a mortality table?

Data used to predict life expectancy and set premiums.

What is a policy fee?

A flat charge added to premiums for administrative costs.

What is a rated policy?

A policy issued with higher premiums due to substandard risk.

What is a standard risk class?

Average risk