Insurance Product Types Flashcards

Which disability income policy provision ensures that benefits are paid only if the insured cannot perform the duties of their own occupation?

Answer: Own-occupation definition

The own-occupation definition pays benefits if the insured cannot perform the specific duties of their regular occupation, even if they can work in another field.

A critical illness insurance policy typically pays benefits:

Answer: As a lump sum upon diagnosis of a covered condition

Critical illness insurance pays a tax-free lump sum upon diagnosis of a specified covered condition, giving the insured financial flexibility.

Which long-term care insurance benefit trigger typically requires the insured to be unable to perform a specified number of Activities of Daily Living (ADLs)?

Answer: ADL benefit trigger

The ADL benefit trigger releases LTC benefits when the insured cannot independently perform a specified number (usually 2 of 6) of Activities of Daily Living.

A participating life insurance policy differs from a non-participating policy because it:

Answer: Pays dividends to policyholders based on company experience

Participating policies allow policyholders to share in the insurer's favorable experience through dividends, which are considered a return of excess premium.

An equity-indexed annuity (EIA) credits interest based on:

Answer: The performance of a specific stock market index, subject to a cap and floor

An equity-indexed annuity ties interest credits to a market index like the S&P 500, but limits gains with a cap and protects against loss with a floor.

Which type of life insurance policy is most commonly used to fund a buy-sell agreement between business partners?

Answer: Individual term or permanent life insurance

Individual term or permanent life insurance policies are the standard funding mechanism for buy-sell agreements, providing the liquidity needed to purchase a deceased partner's share.

A return of premium term life insurance policy is best described as:

Answer: A policy that refunds all premiums paid if the insured survives the term

Return of premium term insurance refunds all premiums paid if the insured survives the full policy term, acting as a form of forced savings.