Individual Life Insurance Planning Flashcards
7 cards from real CLU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Individual Life Insurance Planning flashcards as text
Which of the following best describes the waiver of premium rider?
Answer: Premiums are waived if the insured becomes totally disabled
The waiver of premium rider keeps a policy in force by waiving premium payments if the insured becomes totally and permanently disabled, typically after a 6-month waiting period.
In the needs analysis approach to life insurance planning, survivor income needs are calculated by:
Answer: Subtracting available survivor resources from total financial obligations
The needs analysis approach identifies all financial obligations (debts, income replacement, education, etc.) and subtracts existing resources to determine the coverage gap.
What distinguishes a participating life insurance policy from a non-participating policy?
Answer: Participating policies pay dividends that may reduce premiums or increase coverage
Participating policies entitle policyowners to receive dividends (a return of excess premium), which can be taken as cash, used to buy paid-up additions, or applied to premiums.
Which policy provision protects a policyowner who accidentally misses a premium payment?
Answer: Grace period provision
The grace period provision (typically 30-31 days) allows a policyowner to pay a past-due premium and keep the policy in force without a lapse.
A client wants life insurance that will provide a death benefit AND accumulate cash value tied to a separate account invested in mutual funds. This describes:
Answer: Variable life insurance
Variable life insurance has a fixed death benefit (or variable in variable universal life) and a separate account where cash values are invested in sub-accounts similar to mutual funds.
The reinstatement provision of a life insurance policy typically requires the policyowner to:
Answer: Provide evidence of insurability and pay back premiums with interest
Reinstatement generally requires proof of continued insurability and payment of all overdue premiums with interest, usually within a set period (often 3-5 years) after lapse.
A $1,000,000 survivorship (second-to-die) life insurance policy pays the death benefit:
Answer: When both insureds have died
Second-to-die (survivorship) life insurance pays the death benefit only after both insureds have died, making it popular for estate planning to cover estate taxes.