LLQP Life flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Grace period

The 30 days after a premium due date during which the policy stays in force; if death occurs, the unpaid premium is deducted from the benefit.

Convertible term policy

A term policy the owner may exchange for permanent coverage without new evidence of insurability, usually before a stated age or the end of the term.

Incontestability clause

After the policy has been in force for two years, the insurer generally cannot void it for misrepresentation on the application, except in cases of fraud.

Irrevocable beneficiary

A beneficiary designation that cannot be changed, and the policy cannot be assigned or surrendered, without that beneficiary's written consent.

Reduced paid-up option

A non-forfeiture option that converts the cash value of a lapsed permanent policy into a smaller death benefit that requires no further premiums.

Waiver of premium rider

Waives premiums while the insured is totally disabled beyond the waiting period, keeping the policy and its cash values fully intact.

Universal life cost of insurance

A monthly mortality charge deducted from the policy's cash fund, set by the insured's issue age, sex and risk class, and increasing as the insured ages.

Insurable interest

A financial relationship between the applicant and the life insured that must exist when the application is signed for the contract to be valid.

Elimination period

The waiting time after a disability begins before benefits become payable; a longer elimination period reduces the premium charged.

Non-cancellable disability policy

A contract in which the insurer cannot cancel coverage or increase premiums, for the stated term, as long as the insured keeps paying premiums.

Guaranteed renewable policy

A contract the insurer must renew while premiums are paid, but premiums may be increased for an entire class of policyholders, not an individual.

Own occupation definition

A disability definition satisfied when the insured cannot perform the duties of their own occupation, typically applied for the first two years of a claim.

Residual disability benefit

A pro-rated benefit paid when the insured returns to work part-time or earns less than before, based on the percentage of income lost.

Recurrent disability provision

A relapse from the same or related cause within a stated period, often six months, is treated as continuation of the original claim without a new waiting period.

Coordination of benefits

A rule capping total disability income from all sources, with the insurer offsetting payments such as CPP disability, workers' compensation and other group plans.

AD&D principal sum

The amount paid for accidental death or loss of two limbs or sight; a capital sum, a stated fraction of the principal sum, applies to a single loss.

Segregated fund maturity guarantee

A contractual promise that a set percentage of deposits, commonly 75 or 100 percent, will be returned on the contract's maturity date, often ten years out.

Reset feature

A contractual option that raises the guarantee level to the current fund value, locking in market gains without requiring a new deposit.

Segregated fund death guarantee

On death of the annuitant, the insurer pays at least the guaranteed percentage of deposits plus any top-up, directly to the named beneficiary.

Creditor protection of seg funds

Segregated fund proceeds payable to an irrevocable family beneficiary are generally protected from the annuitant's creditors, subject to provincial bankruptcy clawback rules.

Life annuity

A payout option paying income for the annuitant's lifetime, with the insurer bearing the risk that the annuitant outlives the capital.

Term certain annuity

Guarantees income for a fixed number of years; if the annuitant dies before the term ends, remaining payments go to a named beneficiary.

Prescribed annuity

A non-registered annuity structured so the taxable portion of each payment stays level in dollars, smoothing after-tax income over the payout period.

Joint and last survivor annuity

Income continues until the second of two annuitants dies, usually at a reduced level after the first death, protecting a surviving spouse.

Segregated fund contract holder

The policyholder who owns the individual variable insurance contract, makes deposits, names beneficiaries and chooses the underlying investment funds.

Fiduciary duty

A legal obligation to act in the client's best interest ahead of personal gain, and to disclose or avoid any conflict of interest.

Suitability assessment

Matching a recommendation to the client's objectives, financial situation, risk tolerance, time horizon and existing coverage before any sale is made.

Know your client

The documented process of collecting personal, financial and needs information from a client before making any product recommendation.

Material information disclosure

The duty to tell the client everything relevant to a decision, including commissions, conflicts of interest, product risks and limits of guarantees.

Twisting

Inducing a client to surrender or replace an existing policy through misleading or incomplete information; a prohibited unfair market practice.

Confidentiality duty

Client information may be collected, used or shared only with the client's consent or where required by law, as under privacy legislation.

FINTRAC reporting duty

Federal anti-money-laundering requirement to verify client identity, keep records, report suspicious and large cash transactions, and not tip off the client.