LLQP Life key terms

A requirement that the person applying for coverage would suffer a real financial loss if the insured died, which justifies the purchase and prevents insurance from being used as a bet.

The sum the insurer pays when the insured dies while the policy is in force, after deducting unpaid premiums, policy loans and any other amounts owed under the contract.

A person named to receive the death benefit whom the policyholder can replace at any time without that person's permission, because the policyholder keeps control of the designation.

A beneficiary whose written consent is needed before the policyholder can change the designation, borrow against the policy or surrender it, protecting that person's expected payout.

The amount an insurer pays if a permanent policy with savings is cancelled, being the accumulated fund less surrender charges, unpaid loans and interest.

Coverage that lasts a set number of years and pays only if the insured dies within that period; it has no savings component and the premium usually rises sharply at renewal.

Permanent coverage for the insured's entire life with premiums that stay level and a cash value that grows on a guaranteed schedule, provided the required premiums are paid.

Permanent coverage that separates the cost of insurance, expense charges and an investment account whose value changes with the interest or fund options chosen by the owner.

A policy that may receive dividends from the insurer's results; dividends are not guaranteed and can be taken in cash, used to reduce premiums, buy paid-up additions or accumulate with interest.

A choice given when a cash-value policy lapses, letting the owner keep reduced paid-up coverage or extended term coverage instead of losing the value already built up.

A loan from the insurer secured by a policy's cash value; interest is charged, and any unpaid balance plus interest is subtracted from the death benefit or surrender value.

The days, usually 30 or 31, after a premium is due during which the policy remains in force; a claim paid in that time has the overdue premium deducted.

A clause that stops the insurer from denying a claim or cancelling the policy for misrepresentation after it has been in force for a set period, commonly two years.

An add-on that cancels premium payments while the insured is totally disabled, keeping the policy and its benefits in force during that time.

An applicant whose health, occupation or habits make them more likely to claim than average, so the insurer charges an extra premium, restricts coverage or declines the application.

Coverage that replaces part of a person's income when illness or injury stops them from working, paying regular benefits for as long as the policy's benefit period allows.

The waiting time at the start of a disability before benefits begin; choosing a longer wait lowers the premium but leaves the insured to cover the gap.

The longest time disability benefits will be paid for one claim, for example two years, five years or up to age 65.

A policy-defined state in which the insured cannot perform the duties of their occupation; many contracts use own-occupation for an initial period and any-occupation afterwards.

A benefit for an insured who returns to work but earns less because of the disability; the payout reflects the percentage of income lost.

A rule that a relapse of the same or a related condition within a stated time, often six months, continues the earlier claim instead of starting a new elimination period.

A contract the insurer cannot cancel and whose premium and renewal terms are guaranteed to a stated age, as long as the insured keeps paying.

Rules that set which plan pays first and limit total payments when a person is covered by more than one group plan, so benefits do not exceed the actual loss.

A life insurance contract whose value follows a separate investment account; it provides maturity and death guarantees and can pay a named beneficiary directly, avoiding probate.

A promise that the beneficiary receives at least a set percentage of the money deposited, even if investment losses have pulled the contract value below that amount.

A feature that raises the guaranteed amount to the contract's current value after good investment results, locking in those gains for the death or maturity guarantee.

A contract in which an insurer accepts a lump sum or a series of deposits and, in return, pays out regular income, either for a fixed period or for life.

The point at which savings inside an annuity contract are converted into a guaranteed stream of income payments; the decision is generally irreversible.

An income option that pays for as long as the annuitant lives and stops at death, unless a guarantee period or a survivor option is added.

An annuity that keeps paying while at least one of two named people is alive, often at a reduced amount after the first death, and is commonly bought by couples.

The annual cost of running an investment fund, shown as a percentage of assets and deducted from the fund before its return is reported to investors.

The standard that a recommended product must fit the client's needs, goals, time horizon, risk tolerance and finances, and the reasoning must be recorded.

The required process of collecting and updating facts about a client's finances, objectives, risk tolerance and circumstances so that advice is appropriate.

A legal and ethical obligation to put the client's interests ahead of the advisor's own and to act with loyalty, good faith and full disclosure.

A situation where an advisor's financial or personal interest could improperly affect a recommendation; it must be identified, disclosed and managed or avoided.

Persuading a client to drop one policy and buy another using misleading or incomplete comparisons, which is a prohibited practice because it can harm the client.

Replacing or rewriting a client's policies repeatedly mainly to earn new commissions, with little or no benefit to the client; it is prohibited.

The duty to safeguard client information, share it only for authorized purposes, and follow privacy law when collecting, storing and disposing of it.

Rules obliging insurers and advisors to identify clients, keep records and report suspicious or large cash transactions to the federal regulator to deter laundering and terrorist financing.