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Types of Life Insurance Policies

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Life 

1

By: Jason L. Perez
Department Authorized Insurance Education Provider
⭐️⭐️⭐️⭐️⭐️ | The Insurance School .com

www. My Florida CFO .com
  1. Introduction [Discuss] [k, (5.1) p. 84] Life Insurance [Identify] TWO MAIN Categories of Life Insurance as [Define] Term = Temporary, [Identify] Term Life ONLY provides coverage for a specified timeframe.
  • [Discuss] IMPACT of losing a wage earners contribution to the household.
    1. [Identify] NEEDfor life insurance changes w/ age, employment, and family dynamics.
  • [Compare]Term Life Insurance *VS – [Identify] Whole Life Insurance 
    1. [Identify] Whole Life provides coverage until the #Policy–Ownerturns 100… (VS) 
    2. [Explain] *Term Life Insurance ONLYprovides a #Benefit if the policy–owner DIES while the policy is in force. [Identify] Term policies ONLY provide Death Benefits.
  • #iFlash4u |Insurance Flashcards for You [Identify] Vocabulary & Concepts discussed as, [Identify] [k, (5.1.2) p. 84] Industrial Insurance almost extinct version of Life Insurance where the premium is collected weekly or monthly at the home of the policyowner by the agent.
  • [Identify][k, (5.1.3) p. 84] Group Insurance applications for Employer-Employee Groups.
  • [Define] GroupInsurance – Covers numerous employees under one policy [Identify] Underwriting is based on the entire group, NOT the individuals. [Identify] Typically group insurance will utilize smaller benefits delivered via a Term Life Policy.

2.  [Identify]Basic Types of Term Life Insurance Policies as,

    1. [k, (5.2.1.1) p. 85]#LEVEL Term Insurance – Provides a LEVEL benefit which remains consistent throughout the policy’s entire TERM of coverage.
    2. [k, (5.2.1.2) p. 85]#DECREASING Term Insurance – Benefit DECREASES over time.
      1. [Explain] Typically… Used to collateralize a loan. [Example] Death benefit decreases periodically to reflect the shrinking mortgage balance.
    3. [k, (5.2.1.3) p. 86]#INCREASING Term Insurance – Death benefits INCREASE to address steady increases in #Cost of Living (COL) due to inflation.
      1. [Identify] Typically the increases are tied to *ConsumerPrice Index [Define] As the metric used to forecast policy benefit increases so, benefit keeps pace with COL.

3. TERM[Discuss] [k, (5.2.2.1) p. 86] Renewing a Term Life Insurance Policy. [Identify] #Option to Renew creates a GUARANTEED Renewable Policy. [Explain] Policy-Owner can extend the policy’s Term of coverage before the expiration date WITHOUT #Evidence of Insurability.

    • [Explain]Not having to provide *Evidence you’re in good health is a huge advantage as the insured ages. [Define] #Mortality Charge [Identify] Likelihood of illness, Injury (OR) death increases with age. Mortality Charges increase to reflect this increased risk.
    • [Identify] ART[k, (5.2.2.1) p. 86] MOST Basic type of Renewable term policy as an #ANNUALLY Renewable Term (ART) [Explain] Policy-owner MUST Renew their policy Every Year.
      • [Identify]Policy-Owner renews each year WITHOUT needing to provide the insurer with Evidence of Insurability [Explain] Consequence – Financial implications of ART = PREMIUMS increase at renewal.  [Review] Mortality Charge – metric to calculate cost

[Illustrate] Step Rate [Review] Term Life Policy Structures

4. [Define] Establishing Insurability,[Identify] (3) Underwritings Categories [k, (9.2.9) p. 180]Preferred, Standard & Sub-Standard Risk [Identify] Guaranteed Renewals calculated as Standard [Explain] Insured can CHOOSE to underwrite for Preferred Risk status.

5. TERM [Discuss] Modifying a (Basic) Term Policy w/ [Identify] [k, (6.6) p. 126] PolicyRiders – Cost Extra.

    • [Identify] Return of Premium Rider[Q] HOW MUCH money will a 1-Million Dollar Term Life Policy cost over a 20 – Year Term? [A] ROP is a 100% REFUND of all premiums paid.
      1. [Explain] HOWTerm w/ ROP refunds all premiums paid if you LIVE beyond the Term & increases death benefit by the amt of premiums paid – Death Benefit + Premiums Paid.
    • [Identify] Cost of Living Rider [k, (6.6.9) p. 130] [Review] ART, [Identify] COL Rider is designed for policies with terms longer than one year.

Class = 50 Minutes + Break = 10 Minutes [(1) of 4.8], Total Pre-Licensing Credit = 60 Minutes

6.  [Define] Convert[Identify] [k, (5.2.2.2) p. 87] Option to Convert [Transition] Term is like leasing a car (VS) Whole Life is like buying it. [Identify] Converting a Term to Whole Life is like purchasing the leased vehicle at the end of the lease term… WITHOUT Evidence of Insurability.

    1. [Identify]HOW Insurers calculate converted premiums [Define] ORIGINAL (VS) Attained Age.

7. WHOLELIFE [Introduction] TWO Main types BASIC / ORDINARY Whole Live (OR) Universal Whole Life (5.6.3) [Q] Which do you think has all the extra features, Basic (OR) Universal?

  • [Identify] Whole Life Insurance features, *Maturity at age 100 means the Policy ENDS when the Cash Value = Death Benefit. Designed to occur on the policyowners 100th 
  • [Identify]. #[k, (5.3) p. 89] Cash Value, OWNED by Policy–OWNER like bank acc – Can be collateralized [Identify] Cash Value FUNDED by the policy premium payments.
    • [Compare]Basic Life cash value to basic bank savings acct. – Low Interest gains. [Discuss] Investing methods like (a). Stock market, (b). Indexed Investing Strategics (VS) (c). Aggressively traded stock portfolios.
      1. [Q] Which do you think is the least risky Basic, Index, Variable– Gambling – Uninsurable [Identify] VARIABLE = HIGH RISK – NO GUARANTEEDS.
    • [Explain] Cash Value Investments – Regardless of if Basic (OR) Universal, at inception policy-owners chooses whether cash values will be invested conservatively, Indexed or in a [Identify] SEPARATEACCOUNT for HIGH–RISK Variable Life cash value investment strategies.
      1. [Identify] Three (3)main tax advantages associated with Whole Life as, (1). NO TAX IF CASH VALUE REMAINS IN POLICY, (2). Withdrawals not taxed unless profits realized, (3). Policy loans not considered distributions unless fully surrendered.
    • [Identify] [k, (5.3.1.3) p. 90] Living Benefits b/c of Cash Value policyowners can take out Policy loans [Compare] Like Secured Bank Loans.
      1. [Q] WHAT HAPPENS if the policy-owner dies while they have an outstanding loan? [A] Loan and any applicable interest is subtracted from the death benefit
    • [Identify] BENEFIT to Beneficiary Not taxable.[Discuss] Tax treatment of cash values & policy loans [k, (8.2.11) p. 160] Cash Value gains are not taxed while accumulating
      1. [Identify] SurrenderedCash Values [Define] Cost Basis
        1. [NOTE] Gains are taxable [Define] Gains as profit above Cost Basis.

8. Whole Life Premiums[Identify] [k, (5.3.3.1) p. 91] STRAIGHT Whole Life, Policy-owner pays premiums until death or 100th Birthday [Explain] HOW Level Premium are calculated.

    1. [Identify] [k, (5.3.3.3) p. 92] Single Premium, [k, (5.3.3.2) p. 91] Limited Pay Whole Life.
      1. [NOTE] Policy name identifies the premium duration. 20-Pay Life = 20-Yrs of premiums.
  • 9. [Define]BASIC = Traditional = Ordinary [Identify] Refers to cash value investment method. [Explain] Whole + Life identifies a static, “Traditional” approach – NO Flexibility 
    1. [Compare] *UNIVERSAL Life[Identify] Flexibility – Ability to adjust Premium & Benefit up or down without modification to the original contract. [Explain] “Ordinary” Whole Life Policy cash accrues at a guaranteed fixed rate [Identify] NO Premium (OR) Benefit mods after issue.
      1. [Q] WHAT constitutes Mod to Basic Life Insurance Contract? [A] OVERFUNDING.
      2. [k, (5.4.2) p. 96] [Identify] Modified Endowment Contract [Explain] WHYOverfunding Basic Whole Life has tax consequences – TAX-SHELTER [Identify] 10% penalty on cash withdrawals prior to policy-owners 59½ [NOTE] Policy Loans NOT Withdrawals.
        1. [Explain] HOW Whole Life avoids becoming a MEC [Identify] 7-Pay Test
        2. [Define] Insured exceedsscheduled level premiums during a 7-Yr period
  • [Q]Does the beneficiary still receives policy death benefit TAX FREE? [A] YES
  • [Identify] Joint LifePolicies [k, (5.5.3) p. 98] Covers TWO (OR) More people. Pays when ONE of the insured’s dies. [Identify] Second to DIE / Last Survivor policies as variation of Joint Life.

Class = 50 Minutes + Break = 10 Minutes [(2) of 4.8], Total Pre-Licensing Credit = 60 Minutes

  • [k, (5.6.1) p. 99] Interest Sensitive Whole Life [Identify] NO correlation to “Interest Earned” [Explain] Policy gains tied to the INSURERS Mortality, Investment & Expense management.
    1. Insurer has a favorable year, [Identify] Gains realizedin either, Lower Premiums (OR) cash value deposit. [Compare] Losses = Premium Increase (OR) Reduced benefit amt.
      1. [Compare] to Basic Whole Life’s guaranteed fixed return on cash value.
    2. [k, (5.6.2) p. 99] Adjustable Life[Identify] Combines Term & Permanent insurance.
      1. [Identify] Policyowner can convert from term to whole life (Vice -Versa), [Identify] Adjust premium up – down annually.
        1. [NOTE] EVIDENCE OF INSURABILITY REQUIRED FOR INCREASES IN BENEFIT!

10. [Identify] UNIVERSAL LIFE (UL) Universal control, like the remote. MOST FLEXIBLE POLICY TYPE. Policyowner can change premium & benefit amt up (OR) down WITHOUT new policy like Whole Life.

  • Forget Flo –[Identify] UNIVERSAL LIFE provides its flexibility by Un-Bundling the [Identify] Insurance (Protection) + Savings (Accumulation) + Expense (Loading) Admin & cst for servicing.
    • [Identify]Like Term, Mortality Charge INCREASES over time.
      • Technically, Universal Life is a Term policy with a cash value.
    • [Identify] Premium payment frequency [Explain] Although the #ConsiderationClause outlines the suggested premium schedule, policy-owners can SKIP Premium payments.
      • [Review] PolicyLoans [Identify] HOW Universal policies remain in force w/o making premium payments. [Explain] If the Cash Value is sufficient to pay / cover the Insurance & Expense cost of the policy, it remains in force.

[Identify] UNIVERSAL Policyowner can make partial Cash Value Withdrawals (VS) Basic Whole Life which ONLY allows policyowners to take out policy loans – NO WITHDRAWALS.

  • [Transition]PROVISIONS – Provide [k, (6.2.13) p. 121] Automatic Premium LOAN Provision [NOTE] Key words w/in name [Identify] Keeping the policy in force benefits both Insurers & Policyowners.
    • [Discuss] BOTH Whole & Universal Life policies can be enhanced by [Define] RIDERSavail for an additional FEE, NOT FREE. [Define] Double + Indemnity = (2X) Death Benefit 
    • [Identify] [k, (6.6.6) p. 129]Accidental Death and (OR) Dismemberment Benefit Rider 
      • [Define] Dismemberment= Loss of a qualifying limb like an eye, arm, or leg.
      • [NOTE] Death DOES NOT need be instantaneous– Typically must occur w/in 90-Days.
    • [Identify] Disability Income Rider[Explain] Riders help policies cover injuries & other life events.
      • [Compare]A.S.D.I.= Disability Income, based on earnings and contributions [Identify] Rider benefit tied to the issued benefit amount.
  • [Compare] PartialDisabilities (VS) ONLY Totally Disabilities pay benefits.
  • [Transition][Discuss] Cash Value Investment Strategies [Identify] BOTH Whole & Universal Life policies have THREE (3) cash value investment strategies [Identify] Basic fixed – Low guaranteed returns,
    • [Identify] Index, [Explain] Investment is tied to the performance of an aggregate of stocks,
      • [Identify] Stock Market S&P 500
      • [Identify] Cash Values have a guaranteed minimum rate of return & caps on gains
    • [Define] Variable= Changes, [Identify] Variable Life cash value investment strategies are HIGH RISK w/ NO CASH VALUE GUARANTEES.
      • [Identify]Policyowner assumes responsibility for the cash value performance
      • [Identify] High-Risk Variablefunds must be deposited in a [Define] Separate Account
        • [Compare] Separate(VS) General Account
      • [END][REVIEW] Term (Level, Increase, Decrease) Whole & Universal Life Insurance [iFlash4u] Cash Value, Beneficiary, Insurer, Policy-Owner, Underwriting, Index (VS) Variable, MEC., Renewal, Conversion etc. [QUIZ] 50 Questions

Class = 50 Minutes + Break = 10 Minutes [(3) of 4.8], Total Pre-Licensing Credit = 60 Minutes

11. [Review] Purpose of Life Insurance & Types of Life Policies [Discuss] Benefit creates an estateupon death, [Identify] Term for entrepreneurs during their earning years [Contrast] Retirement mindset with access to cash values for future purchases (OR) unexpected life events.

    • [Identify] Non-Forfeiture of Cash Value [Discuss] Surrender options [Review]

12. [Identify] ANNUITIESwhich LIQUIDATE an estate [Define] Estate as a Sum of Money [Identify] Money is typically distributed as income payments -> ANNUITY = OPPOSITE of Life Insurance 

    • NOTE– Anyone can facilitate an annuity however, only Life Insurance companies are “uniquely” qualified to offer “Income for Life” because of their deep understanding of Mortality Tables and Survivorship Factors [Explain] what is meant by an Annuity being a #Cash Contract with an Insurance Company.
    • Identify how Annuities can be defined by the supporting investment strategy.
      1. (1)Funding Method, (2) Date Income Payment Begin, (3) Payment Options,
      2. (4)Surrender Charges and (5) Underlying Investment strategies.

Typically, someone says ETHICS – You immediately think EWE! NOT ME…Stupid criminals and #Floridaman memes are flashing before my eyes.

Ü WHAT is a Reciprocal State

     These are states which acknowledge Florida Licensees as Authorized Professionals.  This means the regulatory entities of the other state “Acknowledge” Florida licensees as – Knowledgeable & Trustworthy.   

        Since these states will allow our licensees to communicate with their local residents, Florida returns the gesture and allows their resident licensees to conduct the business of insurance in Florida.  

         This reciprocal acknowledgement means non-resident agents don’t need to satisfy Florida’s Pre-Licensing or CE requirements. It’s assumed the agent will complete compliance in their home state. 

VIOLATION | Tampa, Fla. – Insurance Fraud

Thursday, February 20th, 2020

Florida’s CFO, Jimmy Patronis announces the arrest of Four Suspects behind a Two Hundred & Thirty Thousand Dollar ($230,000) Insurance FraudScheme.

« Florida’s CFO Jimmy Patronis was quoted saying, 

– “Fraud has reached epidemic proportions in Florida and scams like this drive-up auto rates for every driver on the road. 

      I’m thankful for the hard work of my fraud detectives in tracking these fraudsters down. We must continue to work together to do everything we can to uncover these fraud schemes and bring these scam artists to justice.”

iLaw 

2

By: Jason L. Perez
Department Authorized Insurance Education Provider
⭐️⭐️⭐️⭐️⭐️ | The Insurance School .com

iLaw Episodes

CONTINUE

🐐

        In iLaw Part-2, we’ll properly introduce the G.O.A.T – -> Jimmy Patronis, Florida’s Chief Financial Officer.  Well, Jimmy may or may not be the Greatest of ALL CFO’s however, I already used the Goat emoji.

        *| Do you know WHY, old-busted textbooks use ugly language like “Chapters”, “Units” and other dry word salad descriptors to compartmentalize main topics?

BECAUSE…
| They DO NOT LOVE YOU – Like we do.

Let’s talk about these Un-Authorized Industry Terrorist.

 Un-Authorized Entities

 

IF someone calls you a bad name – “Sticks and Stones”.  If, someone calls you an Un-Authorized Entity – Either turn yourself in or RUN because, you now have a 3rd Degree FELONY on your Record.  

 

Conducting the business of insurance goes When a person simply participates in the marketing and sale of an insurance product WITHOUT proper *Authorization from the DFS, they’re committing a crime.  

 

END PART-1 Words | 2,592 / 3,350 Total

CONTINUE

Episode 3 ->

<- Click Here

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