Pass The New Mexico Life Insurance Test

Vesting is associated with an insured’s withdrawal of the balance of an annuity before the contractual term of the annuity ends. The vesting period can vary. Typically, the percentage that vests increases on a graduated scale as the end of the annuity term approaches. Once the term ends, the vested amount is 100 percent. To illustrate, a 10 year annuity could vest 10% per year at the end of each year for the duration of the 10 year term. At the end of the 10 year term, the annuity is 100% vested.

For a single premium deferred annuity (SPDA), one lump-sum premium payment is made by the insured and the insured can access a specific amount of income when the insured retires. Deferred annuities provide the advantage of tax deferral, so the value of the annuity gains interest, which is not taxed until the money is withdrawn. The insured can choose the length of time that payouts are received from the annuity.

In the event that a whole life insurance policyholder commits suicide, the full death benefit is paid out, so long as the suicide occurs after the exclusionary period (a/k/a waiting or elimination period) is over. The typical exclusionary period is two years, but could vary depending upon the terms of the particular policy. If the suicide occurs within the exclusionary period, the death benefit paid is limited to the total amount of premiums paid through the time of death.

A “free-look” provision allows a policyholder to purchase a life insurance policy with the option to continue to shop around and change policies if a better policy is found. These policies typically provide a ten to thirty day review period following the actual delivery of the policy. During the review period, the insured can do more research into other policies to determine if the insured wants to stick with the current policy or return it and get a full premium refund. The free look review period starts once the policyholder receives actual physical delivery and the premium is paid. Also, before the free look period can begin, a delivery receipt is issued, dated, and signed by the insured and witnessed by the agent. As long as the premium is paid and the policy is delivered, coverage is in effect.

Adjustable life policies are more flexible compared to other types of policies. In fact, the flexibility it provides is the main reason why adjustable life insurance policies exist. Adjustable life policies allow changes to the main features of the policy, such as the premiums paid and the face value. An ordinary policy is used as a foundation to build upon, and then the features can be adjusted to the needs of the insured. The insured can seek a certain premium payment schedule and amount. In addition, changes can be made to the period of protection and face amount. By using an adjustable policy, the insured gets more flexibility, while the insurer can charge a higher premium versus a whole or term life policy.

Stranger originated life insurance (“STOLI”) is a policy where the beneficiary does not know the insured before the policy is purchased and does not have an insurable interest in the insured. They are not illegal under federal law, but state insurance laws may restrict STOLI policies. STOLI is primarily purchased as an investment for the benefit of the beneficiary, rather than to provide protection to the insured and those close to the insured. STOLI’s are subject to abuse by unscrupulous individuals seeking to take advantage of the elderly.

A viatical settlement is the process whereby a policyholder sells a policy for less than the amount of the death benefit to a private individual. While the insured receives less than the death benefit amount, the insured receives more than the amount of its cash surrender value, so it can be an attractive option when the policyholder is chronically or terminally ill, since it enables the insured to obtain a lump sum settlement payment to live out the remainder of the insured’s life without worrying about finances. The purchaser of the policy becomes the new policyholder and as long as the purchaser continues to make the required premium payments, the purchaser will receive the entire death benefit once the insured dies.

An actuary is a mathematician who calculates the likelihood that certain events will occur and prices the policy of insurance based on the likelihood that the events will happen.

An insurance company is permitted to restrict or exclude a life insurance death benefit pay out if the death is caused by an inherently dangerous activity, such as flying a personal aircraft. Common policy exclusions include: 1) engaging in other dangerous activities, such as auto racing, mountain climbing, hang gliding or cliff diving; 2) Suicide, though the limitation may be limited to the first one or two years (depending on the state) of the policy period; 3) An act of war exclusion, such as if the death occurs while serving in the military or during wartime; 4) A drug or alcohol abuse exclusion; and 5) An exclusion for participating in illegal activities. For temporary participation in a dangerous activity, a short term Accidental Death and Dismemberment policy is an option.

A spouse term insurance rider allows an insured with a whole life policy to obtain term coverage for a spouse. The term policy usually pays a small death benefit. It could also include an option to convert the term policy without having to prove insurability at certain ages reached by the spouse, as defined in the insurance agreement (e.g., 50, 60, 65). Another available feature is that if the insured dies while the premium-paying period is still in effect, the spouse’s coverage will become term coverage, without requiring any further premium.

With a term life insurance policy, the premium is fixed and the policy is for a limited term. Term life riders provide term coverage for a fixed period (e.g. 10, 15, or 20 years), in addition to the permanent whole coverage in the main policy. When the life rider is made part of a permanent life policy, the insured is permitted to convert the term life insurance coverage into permanent life insurance at some later date. By having a portion of the coverage as term, the insured saves money on the premiums at the beginning of the policy term. Notably, if a conversion is performed, an additional underwriting process and medical exam are not required.

Ordinary life insurance may also be referred to as whole life insurance or straight life insurance. Ordinary life insurance is a life insurance policy that is guaranteed to remain in full force for the lifetime of the insured, as long as the premiums are paid, or until the policy maturity date. A life insurance policy is a contract between the insured and insurer that requires the insurer to pay the death benefit of the policy to the policy’s beneficiaries when the insured dies, assuming that the contractual terms are met. Because whole life policies are guaranteed to remain in force as long as the required premiums are paid, the premiums are typically much higher than those of term policies. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid-up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies.

An insurance company is permitted to restrict or exclude a life insurance death benefit pay out if the death is caused by an inherently dangerous activity, such as engaging in a motorcycle race. However, for temporary participation in a dangerous activity, a short term Accidental Death and Dismemberment policy is an option.

Other dangerous activities include auto racing, mountain climbing, hang gliding or cliff diving. Other policy exclusions include: 1) Suicide, though the limitation may be limited to the first one or two years (depending on the state) of the policy period; 2) An act of war exclusion, such as if the death occurs while serving in the military or during wartime; and 3) A drug or alcohol abuse exclusion and an exclusion for participating in illegal activities.

A child who is a dependent, unmarried child of a worker that is deceased, disabled or retired can obtain Social Security benefits once that child turns 18 years old and becomes disabled before the age of 22.

Vesting is associated with an insured’s withdrawal of the balance of an annuity before the contractual term of the annuity ends. The vesting period can vary. Typically, the percentage that vests increases on a graduated scale as the end of the annuity term approaches. Once the term ends, the vested amount is 100 percent. To illustrate, a 10 year annuity could vest 10% per year at the end of each year for the duration of the 10 year term. At the end of the 10 year term, the annuity is 100% vested. Here, the vesting schedule is 20% per year (100% / 5 years), so at the end of 3 years, 60% would be vested (3 x 20%).

A last survivor annuity allows a married couple to receive a standard payment every month until both of them die. The survivorship provision means that payments are made until the second (surviving) spouse dies, so the payments will not end once the first spouse dies. In addition, they could also choose the annuity option that allows the payments to be split between the surviving spouse and a beneficiary of the dead spouse. The beneficiary receives payments until the second spouse dies.

Reina has purchased a policy with a “free-look” provision, which allows a policyholder to purchase a life insurance policy with the option to continue to shop around and change policies if a better policy is found. These policies typically provide a ten to thirty day review period following the actual delivery of the policy. During the review period, the insured can do more research into other policies to determine if the insured wants to stick with the current policy or return it and get a full premium refund.

The free look review period starts once the policyholder receives actual physical delivery and the premium is paid. Also, before the free look period can begin, a delivery receipt is issued, dated, and signed by the insured and witnessed by the agent. As long as the premium is paid and the policy is delivered, coverage is in effect. The free look review period starts once the policyholder receives actual physical delivery and the premium is paid. Also, before the free look period can begin, a delivery receipt is issued, dated, and signed by the insured and witnessed by the agent. As long as the premium is paid and the policy is delivered, coverage is in effect.

A payer benefit provision in a child’s life insurance policy allows for the suspension of premium payments if the person responsible for paying the insurance premiums passes away or becomes disabled before the child reaches the age of majority (adulthood). That person is usually a parent or guardian of the child. If the payer dies or becomes disabled, the premiums are waived for the amount of time defined in the insurance contract.

A conversion privilege is a provision in a group life insurance policy that provides a person with the option to transition to an individual life insurance policy when leaving an employer that covered the individual under a group policy. The conversion privilege provides an easy way to avoid a lapse of coverage when leaving an employer, since no medical exam or additional underwriting is required. This also provides the insurer with the opportunity to sell a new policy to a current client.

Non-contributory insurance plans provide the benefit of automatic approval, since they are automatic-issue policies with no need for a medical examination to obtain coverage. The employer pays the entire premium for non-contributory plans. The employee pays nothing.