Crimes of this nature are misdemeanors. There are
various levels of punishment based upon the level of damage done to the insurer and its clients.
A misdemeanor punishable by a fine up to $1,000, a year in jail, or both.
A misdemeanor punishable by a $5,000 fine, if unintentional, or $10,000, if intentional.
Administrative fines only.
A felony punishable by a fine up to $1,000, a year in prison, or both.
The contestability period is still in force so the policy can be rescinded by the company for material misrepresentation on the application.
No course of action allowed since the policy has already been issued
A hearing by a court of law to determine the appropriate actions
Rescind the policy
An administrative hearing by the DOI
Under a binding receipt a claim would be paid even if the policy was not issued yet. Binding receipts tend to be used for property insurance.
Conditional receipts are commonly used for life insurance applications.
The binding receipt always provides immediate coverage from the date of the receipt
The conditional receipt can provide coverage from the date of application once the application is later approved by underwriting
No claim is paid with either receipt until a policy is issued
An insurer incorporated in a foreign country is considered to be an alien insurer.
A domestic insurer
An alien insurer
An admitted insurer
A foreign insurer
The guaranteed insurability rider/option allows the
insured to purchase additional amounts of insurance at specified times, regardless of health status, but at an increased premium.
Accelerated death benefit
Waiver of premium
Guaranteed insurability/future purchase option
Double indemnity rider
The nonforfeiture option that results in a paid-up policy with the same face amount as the original policy is the “Extended Term” option.
Reduced paid-up insurance
Extended paid-up insurance
Extended term insurance
Cash surrender value
Explanation: Universal life insurance is also known as “flexible premium” The calculation for gross premium is: Mortality risk – Interest + Expense, any remaining premium will be applied to cash value.
“A 1035 exchange includes an exchange from one life policy to anther life policy, a life policy to an annuity, or from one annuity to another annuity. Exchanging an annuity for a life policy is not a “1035 exchange.”
A variable annuity exchanged for a variable universal life policy.
A universal life policy exchanged for a whole life policy.
A whole life policy exchanged for a variable life policy.
A variable annuity exchanged for a fixed annuity.
Even though a sub-standard rating results in a higher premium, the risk (insured) has been accepted by the insurer. Declined means the risk is too high and therefore is not accepted by the insurer.
The “Spendthrift Clause” keeps the beneficiary’s creditors from attaching the death benefit while held by the insurance company.
Common Disaster Clause.
Spendthrift (Trust) Clause.
The Beneficiary Protection Clause.
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