Term & Universal Life

Table of Contents

 

Chapter 1: Defining Life Insurance

6

 

Basic Concepts

6

 

How Much is Enough?

7

 

Calculating Expenses

8

 

Another calculating method

10

 

An Emergency Fund

11

 

Child-Care Expenses

11

 

Educational Fund

11

 

Debt Repayment

12

 

Coming to a Conclusion

12

 

Insurance Companies Measure Risk

13

 

What Type of Life Insurance is Appropriate?

14

 

What Will the Insurance Cost?

15

 

Term Insurance

16

 

Reentry Level Term

18

 

Level Decreasing Term Insurance

19

 

Permanent Insurance

20

 

Universal Life Insurance Policies

23

 

Universal Life Evolution

24

 

How Do Universal Life Policies Compare to Traditional Plans?

26

Chapter 2: The Life Insurance Contract

29

 

Defining the Contract

30

 

Policy Application

30

 

Policy Ownership

31

 

Preventing Money Laundering Activities

32

 

Terrorism Produces Insurer Risk

32

 

Legal Requirements Adopted

33

 

Broker-Dealer Requirements

35

 

AML Program Requirements

36

 

Employee training can be in several formats

37

 

Know Your Customer (KYC)

39

 

Compliance

39

 

Suspicious Activity Reports Filing Requirements

40

 

A Change in Thinking

40

 

Three stages of money laundering

41

 

A Global Problem

42

 

Covered Products

43

 

Nine Identified ML Methods

45

 

Money Laundering Indicators Not Unique to Insurance Products

47

 

Policyholder Characteristics and Behaviors

48

 

A Known Criminal or Criminal Associate or Relative

50

 

Erratic or Abnormal Use of Policies

50

 

High Premiums Compared to Verifiable Income

51

 

Lack of Concern for Charges or Costs

51

 

Undue Interest in Payout Options

51

 

Change of Beneficiary

52

 

Insurance on Assets that Appear Inconsistent with Income

52

 

Early or Suspicious Claims

52

 

Product Characteristics and Maintenance

54

 

Customer Due Diligence (CDD)

55

 

In Conclusion

57

Chapter 3: Policy Features and Provisions

59

 

Premiums / Policy Options

59

 

Nonforfeiture Options

59

 

Dividend Options

60

 

Settlement Options

61

 

State Required Provisions

62

 

Incontestability

63

 

Misstatements in the Application

64

 

Deferment Clause

64

 

Loan Values

64

 

Grace Periods and Reinstatement

65

 

Allowed Policy Provisions

66

 

Suicide / Aviation

66

 

War

67

 

General Provisions

67

 

Deduction of Indebtedness and Premium Refund

67

 

Change of Beneficiary

67

 

Assignment

68

 

Beneficiary Designations

68

 

Policy Payments

70

 

Cash Values

70

 

Dividends / Proceeds

71

 

Special Clauses

72

Chapter 4: Contract Use

74

 

Group Insurance Principles

74

 

Eligible Groups

74

 

Single Employer Groups

74

 

Multiple Employer Trusts (METS)

75

 

Unions, Associations, and Other Groups

75

 

Creditor-Debtor Groups

75

 

Underwriting Advantages

76

 

Keeping Current with Business Needs

77

 

The Informed Consumer

78

 

Providing a Quote

78

 

The Contract Participants

80

 

The Insurer

80

 

The Insured

81

 

Insurance Contract

81

 

Underwriting and Rating

82

 

Finance

82

 

A Public Interest

83

 

Key Person Insurance

83

 

Buy-and-Sell Agreements

84

 

The Key Person Principle

85

 

Insurable Interest for Life Insurance

86

 

Health Insurance on Key Employees and Owners

87

 

The Small Companys Exposure

89

 

Loss of the Small Business Owner

89

 

Planning Ahead for Death or Disability

93

 

Insuring Entities

94

 

Private and Government Insurance

94

 

Private Insurers

94

 

Life Insurance

95

 

Property and Liability Insurance

95

 

Government Insurance

96

 

Voluntary Government Insurance

96

 

Compulsory Government Insurance

96

 

Mutual Companies

97

 

Assessment Mutuals

98

 

Non-assessable Mutuals

100

 

Conversions

100

 

Reciprocal or Inter-Insurer Associations

101

 

Stock and Mutual Underwriting

102

 

Factory Mutuals

102

 

Superior Agents and Brokers

104

 

 

 

 

United Insurance Educators, Inc.

8213 352nd Street East

Eatonville, Washington 98328-8638

 

Email: mail@uiece.com