What does liquidity mean in a life insurance policy?
What does "liquidity" mean in a life insurance policy? Availability of cash value If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriters main concern? The existence of insurable interest between the applicant and the insured
What is the purpose of key person insurance Quizlet?
What is the purpose of key person insurance quizlet? What is the purpose of key person insurance? To minimize the risk of financial loss caused by the death of a key employee.
What was determined during the underwriting process for life insurance?
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium A The applicant's habits and health do not affect the premiums. B It will likely be lower because the applicant is a preferred risk.
What is a monthly summary for life insurance?
Permanent insurance (usually, whole life) An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
What does liquidity refer to in a life insurance policy?
With respect to life insurance, liquidity refers to how easily you can access cash from the policy. The concept applies mostly to permanent life insurance, because it accumulates cash value over time. Term life insurance doesn't have that cash-value component.
Which is true about the spouse term rider?
The Spouse Rider provides level term insurance on the insured's spouse. It can be converted to its own whole life policy at certain times and within certain age limits. This rider will terminate when the base policy ends or the spouse reaches a certain age.
What is the earliest a policy may go into effect?
This is called estate conservation. d)Survivorship insurance. The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.
When an insured dies who has first claim to the death proceeds of the insured life insurance policy?
Your life insurance policy should have both “primary” and “contingent” beneficiaries. The primary beneficiary gets the death benefits if he or she can be found after your death. Contingent beneficiaries get the death benefits if the primary beneficiary can't be found.
Which of the following is an example of liquid in a life insurance contract?
Which of the following is an example of liquidity in a life insurance contract? The cash value available to the policyowner. Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.
What happens if someone dies shortly after getting life insurance?
If a policyholder dies shortly after buying life insurance, the insurance company has more freedom to contest/deny the beneficiary's claim. Consequently, it is all the more important to contact an experienced life insurance beneficiary lawyer if your claim has been unjustly delayed or denied.Nov 10, 2017
What happens when a life insurance policy is surrendered for its cash value?
What happens when a policy is surrendered for cash value? When a policy is surrendered, you'll lose coverage and no longer be responsible for paying insurance premiums. If your policy has cash value, you'll get this money after surrender fees have been taken into account.
When a whole life policy lapses or is surrendered?
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy.
What is liquidity in life insurance?
The cash value of availability to the policyowner. Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.
When does an agent collect the premium?
When the agent delivers the policy , collects the initial premium, and the applicant completes and acceptable statement of good health. If the initial premium is not paid with the application, the agent will be required to collect the premium at the time of policy delivery.
What is the human life value approach?
The Human Life Value Approach to determin ing the value of an individual's life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money.
Does a waiver of premium go into effect?
The policy does not go into effect until the premium has been collected. If the premium was not collected at the time of the application, the producer may also be required to get a Statement of Good Health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy, ...
Is life insurance premium tax deductible?
D. Premiums are tax deductible as a business expense. B. Premiums are not tax deductible as a business expense. An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued.
Does a debtor have an insurable interest in the life of the lender?
A debtor has an insurable interest in the life of a lender. A lender has an insurable interest in the life of a debtor, but only to the extent of the debt. The debtor does not have an insurable interest in the life of the lender.
What does liquidity refer to in a life insurance policy quizlet?
Liquidity in life insurance refers to availability of cash to the insured through cash values.
What is an example of liquidity in a life insurance contract?
Which of the following is an example of liquidity in a life insurance contract? The cash value available to the policyowner. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.
What is considered a liquid asset?
A liquid asset is a type of asset that can be rapidly converted into cash while keeping its market value. There are other factors that make assets more or less liquid, including: How established the market is.
Is life insurance a liquid asset?
Assets fall into two categories: liquid and fixed. Liquid assets are assets that can be converted quickly and easily to cash without losing value. Other liquid assets include life insurance policies that have a cash surrender value, savings bonds, stocks, and certificates of deposit without withdrawal penalties.
What does liquidity refer to?
Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. Cash is the most liquid of assets, while tangible items are less liquid. Current, quick, and cash ratios are most commonly used to measure liquidity.
What does the term illustration in a life insurance policy refer to?
An illustration is a presentation or depiction provided to prospective or new policy owners that shows how the policy should perform under specific circumstances set out in the illustration.
When an insured dies who has first claim to the death proceeds of the insured life insurance policy?
Two “levels” of beneficiaries Your life insurance policy should have both “primary” and “contingent” beneficiaries. The primary beneficiary gets the death benefits if he or she can be found after your death. Contingent beneficiaries get the death benefits if the primary beneficiary can’t be found.