Life-Only flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Insurable interest
- A lawful, substantial economic or emotional interest in the continued life of the insured that must exist at the time the policy is issued.
- Incontestability clause
- A provision barring the insurer from contesting the policy for misrepresentation after it has been in force for two years from issue, except for nonpayment of premium.
- Grace period
- A period, 30 days in California for individual life policies, during which coverage continues after a premium due date before the policy lapses.
- Reinstatement
- Restoring a lapsed policy to its original status by paying overdue premiums with interest and providing evidence of insurability, generally within three years.
- Suicide clause
- A provision limiting the insurer's liability to a return of premiums if the insured dies by suicide within a stated period, two years in California.
- Misstatement of age
- A provision adjusting the death benefit to the amount the premium would have purchased at the insured's correct age or sex.
- Nonforfeiture options
- Choices available when a cash value policy is surrendered or lapses: cash surrender value, reduced paid-up insurance, or extended term insurance.
- Free-look period
- A period after delivery, at least 10 days in California, during which the policyowner may return the policy for a full premium refund.
- Level term insurance
- Term coverage with a face amount and premium that remain fixed for the stated term, paying only if death occurs during that term.
- Renewable term
- A term policy that guarantees the owner the right to renew coverage at the end of the term without providing new evidence of insurability.
- Convertible term
- A term policy that allows the owner to exchange it for permanent coverage without evidence of insurability, usually at a stated age limit.
- Decreasing term
- Term coverage whose face amount declines over the policy term while the premium remains level, often used to match a declining mortgage balance.
- Whole life insurance
- Permanent coverage with a level premium, guaranteed cash value, and a guaranteed death benefit payable whenever death occurs.
- Universal life insurance
- Flexible-premium permanent coverage with a separately tracked cash value, monthly cost-of-insurance charges, and possible lapse if cash value is insufficient.
- Universal life Option A
- A death benefit option that pays a level face amount regardless of the cash value accumulated in the policy.
- Universal life Option B
- A death benefit option that pays the face amount plus the accumulated cash value, producing an increasing total benefit.
- Fixed annuity
- An annuity in which the insurer guarantees the credited interest rate and bears the investment risk during the accumulation phase.
- Variable annuity
- An annuity whose value fluctuates with the performance of underlying investment subaccounts, with investment risk borne by the contract owner.
- Life-only annuity payout
- A settlement option paying income for the annuitant's lifetime only, with no refund or survivor benefit, producing the highest periodic payment.
- Twisting
- Inducing a policyholder to lapse, surrender, or replace a policy through misrepresentation or an incomplete comparison of policies.
- Churning
- Replacing a policy with another policy from the same insurer primarily to generate new commissions for the producer.
- Rebating
- Offering cash, gifts, or other inducements not stated in the policy to persuade a person to buy insurance; prohibited in California.
- Commingling
- Mixing premiums collected for an insurer with the producer's personal or business funds instead of holding them separately and remitting them promptly.
- Replacement notice
- A disclosure given to an applicant when a sale will replace existing life insurance, identifying the existing coverage and comparing the policies.
- Suitability standard
- The requirement that a producer have reasonable grounds, based on the consumer's needs and finances, to recommend a particular policy or annuity.
- Insurance Commissioner
- The elected official who heads the California Department of Insurance and enforces the Insurance Code through licensing, examinations, and penalties.
- Life-only license authority
- A California producer license authorizing life insurance and annuity sales but not accident and health, property, casualty, or workers' compensation coverage.
- California prelicensing hours
- The 20 hours of prelicensing education required before taking the life-only producer licensing examination in California.
- Continuing education requirement
- California producers must complete 24 hours of continuing education every two years, including at least 3 hours of ethics, to renew a license.
- License term
- A California insurance producer license remains valid for two years and must be renewed before its expiration date to continue selling.
- Unfair practices
- Acts prohibited by Insurance Code section 790.03, including misrepresentation, false advertising, coercion, unfair discrimination, and unfair claim settlement practices.
- Commission sharing rule
- Commissions for insurance sales may be paid only to licensed persons; sharing commissions with an unlicensed person is prohibited except as the law allows.