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 Companyís 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