You’re required to maintain all funds that represent premium in the separate premium account. This includes:
- Premium taxes
- Premium financing proceeds
- Agency bill cancellation return premiums
It’s important to provide the business oversight necessary to protect the account from shortages.
See RCW 48.18.170 (leg.wa.gov).
Common causes of shortages in separate premium accounts
- Some fail to make timely deposits into the separate premium account. Some insurers are sweeping the account within one day. If a daily deposit is not made, the sweep may occur before the funds are deposited and overdraw the account.
- Poor recordkeeping practices that result in transferring more fee and agency-bill commission income from the separate premium account than the agency is entitled to are common.
- Uploading errors that result in transmitting a payment multiple times can result in shortages.
- Skimming occurs when not all of the funds are deposited into the separate premium account. This can happen when the agency collects substantial premiums in the form of currency and coin. (Look for insurer sweeps coming out of the bank account or check payments by your agency without a corresponding receipt of premium money.)
- Advancing premiums for customers without maintaining an official record of the account receivable happen often. Look for insurer sweeps coming out of the bank account or check payments by your agency without a corresponding receipt of premium money. Without a list of whose premium has been advanced and some corresponding paperwork/agreement, your agency may not collect premium. The source of the account shortage also may be difficult to pinpoint later.
- Sometimes refunding agency bill cancellation return premiums from the account without depositing the unearned commission amount the agency owes from the operating account happens.
- Bank fees are covered to transmit payments to finance companies as an accommodation for clients without reimbursing the costs from the operating account. These customer accommodation fees should be reimbursed to the premium account from the operating account.
- Bank charges assessed against the separate premium account can cause a shortage (e.g. monthly service charges; NSF (non-sufficient funds) charges on client checks, and overdraft charges). It’s a good practice to monitor the bank account on a frequent basis (daily if possible) to spot problems before they compound. The bank fees should be reimbursed to the premium account from the operating account, if the agency is not maintaining sufficient additional funds in the premium account.
- Merchant fee credit/debit card processing charges coming out of the premium proceeds can cause shortages. Some agencies process all
card transactions online to the insurer or broker’s account, to avoid having to absorb the merchant fees. If your agency processes card transactions in the separate premium account, you’ll need to:
- Maintain additional funds in the account sufficient to absorb the fees.
- Track the additional funds remaining in the account.
- Periodically deposit additional funds in the account to prevent the merchant fees from depleting insurance premiums.
Game Title: Colorado L&H
Question: 1Interest on accumulations is taxed | Dividends are not taxble |
Taxed as ordinary income | Taxed as capital gains |
If the dividends exceed the total premium payments for the insurance policy, the excess dividends are considered taxable income |
Game Title: Colorado L&H
Question: 2Single premium | Variable premium |
Flexible premium | Deferred premium |
An immediate annuity has a single premium. |
Game Title: Colorado L&H
Question: 3To attest that the statements on the application are accurate to the best of the applicant’s knowledge | To attest that the statements on the application are warranties |
To give power of attorney to the producer if needed | To attest that all statements on the application are guaranteed to be true |
An applicant's signature represents that the statements on the application are true to the best of the applicant's knowledge. |
Game Title: Colorado L&H
Question: 4A guardian will be court-appointed in the event of a death claim | A contingent beneficiary must be named |
The minor has immediate access to all proceeds upon death of the insured | It is known as a tertiary beneficiary |
Game Title: Colorado L&H
Question: 5Revocable | Tertiary |
Irrevocable | Contingent |
With a revocable beneficiary designation, the policyowner may change the beneficiary at any time without notifying or getting permission from the beneficiary. |
Game Title: Colorado L&H
Question: 6Aleatory | Adhesion |
Unilateral | Consideration |
Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss. |
Game Title: Colorado L&H
Question: 7The cost | The nonforfeiture options |
The contestable period | The assignment of ownership |
In this situation, the cost of insurance is most important when an insured owner is trying to decide whether to convert term insurance at the insured's original age or the insured's attained age. |
Game Title: Colorado L&H
Question: 815 | 10 |
20 | 25 |
The free-look period for individual life insurance is 15 days. |
Game Title: Colorado L&H
Question: 9Extended term | Cash surrender |
Reduced paid-up | Dividend |
Choosing the "extended-term option" allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. |
Game Title: Colorado L&H
Question: 10Corporate executive | Licensed home office employee |
Personal producer | General agent |
A corporate executive is not eligible to receive commissions from the sale of an insurance product. |
Game Title: Colorado L&H
Question: 11Variable Life | Universal life |
Fixed annuity | Modified endowment contract |
The variable nature of a variable whole life insurance is its death benefit. However, if investment performance is poor, the death benefit will not go lower that the policy's guaranteed minimum. |
Game Title: Colorado L&H
Question: 12Separate insurance trust account | Joint savings account |
Combined trust account | Bonded insurance trust account |
If a producer is going to deposit any premium or returned premium funds into a bank or savings account (until remitting the funds to the insurer or person entitled to the funds), he/she must use a separate insurance trust account. Any such deposits are subject to Colorado fiduciary law. |
Game Title: Colorado L&H
Question: 13Underlying equity investments | Only available with single premium |
Offers a fixed interest rate | Does not require an insurance license |
Variable annuities involve underlying equity investments in a separate account. |
Game Title: Colorado L&H
Question: 14Contributory | Noneligible |
Noncontributory | Eligible |
Employees share in the premium cost with contributory plans. |
Game Title: Colorado L&H
Question: 15Each partner must own a policy on the other partners | One policy is owned and paid for by the company |
One policy is owned by the company and premiums are split equally among the partners | Each partner owns their own individual policy |
In this situation, each partner must own a policy on the other partners. |
Game Title: Colorado L&H
Question: 16The gross premium is higher on a monthly payment mode as compared to being paid annually | The gross premium is lower on a monthly payment mode as compared to being paid annually |
The cash value from a life policy paid on a monthly basis builds quicker than one paid on an annual basis | The face amount of a life policy on a monthly basis is higher that one paid on an annual basis |
A premium payment mode that is more frequent than an annual payment will result in a higher gross premium. |
Game Title: Colorado L&H
Question: 17Full face amount minus any past due premiums | Refund of all premiums paid, plus interest |
Refund of all premiums paid | Full face amount |
If an insured dies during the grace period of a life insurance policy before paying the past due premium, the beneficiary will receive the face amount of the policy less any past due premiums. |
Game Title: Colorado L&H
Question: 18A nonadmitted insurer | A prohibited entity |
An alien company | An undesirable carrier |
Game Title: Colorado L&H
Question: 19Premium payments limited to a specified number of years | Graded death benefits |
No cash value | Premium payments that are paid to age 100 |
Game Title: Colorado L&H
Question: 20Reinstatement | Insuring |
Conversion | Consideration |
Most insurers require evidence of insurability be provided upon reinstatement of a lapsed policy. |
Game Title: Colorado L&H
Question: 21Waived one of its legal rights | Issued a voidable policy |
Committed an act of fraud | Assigned the risk to a reinsurer |
If an insurer accepts an application that contains unanswered questions and makes the application part of the life contract, the company has waived one of its legal rights. |
Game Title: Colorado L&H
Question: 22It is never okay | It is okay with the insured's written approval |
It is okay with the insurer's written approval | It is okay if records are kept on the transaction |
It is never okay to commingle the insured's funds with the producer's funds. |
Game Title: Colorado L&H
Question: 23Prior to using the assumed name | No notice is required |
No later than 30 days after using the assumed name | At the time of license renewal |
An insurance producer doing business under any name other than the producer's legal name is required to notify the commissioner of insurance prior to using that assumed name. |
Game Title: Colorado L&H
Question: 24Free-look period has expired | Policy is delivered |
Insurance company issues policy | Initial premium is collected |
In this situation, the policy will go into effect after all these actions occur EXCEPT the expiration of the free-look period. |
Game Title: Colorado L&H
Question: 25Insurer’s prior year financials | Deductibles |
Covered cancer screenings | Balanced billing |
Game Title: Colorado L&H
Question: 26The commissioner will not renew the license | The producer will be forced to return all commission to the insurer |
The commissioner will have the producer imprisoned | The product must assign a portion of the business to another producer |
Game Title: Colorado L&H
Question: 27Communication or materials used within an insurer’s own organization | Newspapers |
Free lunch seminars | Telemarketing scripts |
Game Title: Colorado L&H
Question: 2830 | 15 |
45 | 55 |
Game Title: Colorado L&H
Question: 29Conversion | Modification |
Exchange | Adjustable |
The conversion provision allows the policyowner to change the policy to a permanent life policy without providing evidence of insurability. |
Game Title: Colorado L&H
Question: 30Benefit payments start within one payment period of purchase | Benefit payments start within 5 years of initial purchase |
Normally tied to a specific equity or stock index | Periodically contributions begin immediately |
An immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase. |
Game Title: Colorado L&H
Question: 31Applicant | Producer |
Underwriter | Insurance commissioner |
When an applicant makes a mistake in the information given to a producer in completing the application, the applicant can have the producer correct the information, but the applicant must initial the correction. |
Game Title: Colorado L&H
Question: 32Life settlement contract | Cash surrender |
Buy-sell arrangement | 1031 exchange |
A life settlement contract allows a policyowner to sell a life insurance policy for more than its cash value. |
Game Title: Colorado L&H
Question: 33Reviewing and approving license applications | Writing insurance laws |
Settling insurance rates | Settling sales quotes |
Game Title: Colorado L&H
Question: 34Additional Whole Life coverage at specified times | Additional term life coverage at any time |
Additional term life coverage at specified intervals | Additional whole life coverage at any time |
A guaranteed insurability option in a whole life policy permits the policyowner to purchase, without evidence of insurability, stated amounts of whole life insurance at specified times. |
Game Title: Colorado L&H
Question: 35Risk classification | Warranty review |
Insurable interest | Inspection report |
Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates. |
Game Title: Colorado L&H
Question: 36Comprehensive coverage may increase under the new policy | The risk that a financial loss will occur when values in the existing policy end and new values are built in new coverage |
The new policy may be based on the insured's attained age, with higher premiums than existing coverage | The policyowner may pay additional costs for the new policy to issue |
Game Title: Colorado L&H
Question: 37Policy issued with a rating | Policy mailed to applicant |
Policy mailed to agent | Policy delivered to the applicant by the agent |
All of these constitute delivery of the policy EXCEPT issuing a rated policy. |
Game Title: Colorado L&H
Question: 38$10,000 | $7,500 |
$5,000 | $2,500 |
The anti-money laundering provisions of the USA patriot act require insurers to report any cash payments received that are greater than $10,000. |
Game Title: Colorado L&H
Question: 39Payments are made to an annuitant for life | Life expectancy of the annuitant is not a factor |
The payments are received tax-free | Only available to employees of nonprofit charitable, educational, and religious organizations |
A single life annuity pays for the life of the annuitant. |
Game Title: Colorado L&H
Question: 40A representation | An insuring agreement |
A mutual assent | A warranty |
A representation is a statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract. |
Game Title: Colorado L&H
Question: 41Whole life | Level term |
Credit life | Ordinary life |
Game Title: Colorado L&H
Question: 42Avoid a policy lapse | Provide a source of revenue to the insurance company |
Allow a policyowner to request a policy loan | Allow a policyowner to take out additional coverage without evidence of insurability |
The purpose of the automatic premium loan is to keep the policy from lapsing. |
Game Title: Colorado L&H
Question: 43If there is suspicious of an unauthorized person engaging in insurance business without being licensed | If there is a suspicion of an insurance policy being replaced |
When an insurance agency does not reach their annual sales quota | For any reason the commissioner sees appropriate |
Game Title: Colorado L&H
Question: 445 months | 3 months |
6 months | 12 months |
Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period |
Game Title: Colorado L&H
Question: 45Conditional | Binding |
Initial premium | Contingent |
A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect. |
Game Title: Colorado L&H
Question: 46The 9/11 terrorist attacks | The McCarran-Ferguson Act of 1945 |
The Fair Credit Reporting Act of 1970 | The 1945 End of WWII Act |
Game Title: Colorado L&H
Question: 47Appointed by the Governor | Elected by the NAIC |
Elected by residents of Colorado | Appointed by the state Senate |
The commissioner is appointed and serves at the pleasure of the Governor. |
Game Title: Colorado L&H
Question: 48A producer may never commingle personal funds with funds paid by or to a client | A producer may commingle personal funds with funds paid by or to a client with the client's written permission |
A producer may commingle personal funds with funds paid by or to a client with insurer's written permission | A producer may commingle personal funds with funds paid by or to a client with prior approval from the department of insurance |
A producer may NEVER commingle personal funds with funds paid by or to a client. |
Game Title: Colorado L&H
Question: 49When the applicant receives the policy and pays the initial premium | When the MIB report is received |
Upon a completed medical examination | Upon policy approval |
Game Title: Colorado L&H
Question: 50Controlled business | Family business |
Domestic business | Personal business |
Insurance written in the licensee's own interests of his/her spouse or employer is called controlled business. |
Game Title: Colorado L&H
Question: 51Free-look period | Probation period |
Elimination period | Refund period |
The free-look period offers an insurance applicant the right to review the contract and receive a full refund. |
Game Title: Colorado L&H
Question: 52The claim will be denied under the suicide provision | The claim will be paid under the settlement provision |
The premiums will be returned under the free-look provision | The benefit will double under the accidental death provision |
After the life insurance policy has been in effect for 1 year, an insurer may not use an insured's suicide as a reason to refuse payment of policy benefits. This policy was in effect for less than 1 year. |
Game Title: Colorado L&H
Question: 53A person generally is considered to have an unlimited insurable interest in himself or herself | The beneficiary must have insurable interest in the insured at the time of death |
If the beneficiary no longer has insurable interest in the insured during the contestable period, the policy must be cancelled | A new beneficiary must be designated if the original beneficiary no longer has insurable interest in the insured |
Game Title: Colorado L&H
Question: 54Variable life | Modified whole life |
Universal life | Adjustable life |
Game Title: Colorado L&H
Question: 55Cash Value provision | Extended term provision |
Owner's rights provision | Consideration clause |
Game Title: Colorado L&H
Question: 56Performance is conditioned upon a future occurrence | They are "take it or leave it" contrtacts |
Both parties consent to the contract | The contract is voidable upon proof of fraud |
Insurance contracts are aleatory. This means there is an element of chance and potential for unequal exchange of value or consideration for both parties. An aleatory contract is conditioned upon the occurrence of an event. |
Game Title: Colorado L&H
Question: 57April 1st of the year following the year the participant attains age 70 ½ | April 1st of the year following the year the participant attains age 59 ½ |
Age 59 1/2 | Age 65 |
Distributions from a traditional IRS must be made by April 1 following the year the participant turns age 70 1/2 or an excise tax will be assessed. |
Game Title: Colorado L&H
Question: 5810 Year convertible term | Increasing term |
Decreasing term | Variable term |
A 10 year convertible term life policy contains a renewability provision. |
Game Title: Colorado L&H
Question: 59Obtain the consumer’s signed statement documenting his or her refusal to provide suitability information | Obtain consent from the insurer to proceed |
Obtain consent from the commissioner to proceed | Cancel the application |
Game Title: Colorado L&H
Question: 60Misrepresentation | Converting a term life policy to a whole life policy |
Selling with a nonresident license | Replacement |
Game Title: Colorado L&H
Question: 61Straight life | Endowment |
10-year renewable term | Joint life |
Straight life insurance policies provide an insured the greatest amount of permanent protection per dollar of annual premium. |
Game Title: Colorado L&H
Question: 62Insurance contract to the proposed insured | A binding receipt to the proposed insured |
Application and initial premium to the insurer | Policy summary sheet and disclosure material to the proposed insured |
Policy delivery refers to the delivery of the insurance contract to the applicant. |
Game Title: Colorado L&H
Question: 63Federal government | Self employed individuals |
Employees | Employers |
Game Title: Colorado L&H
Question: 64Term Life | Straight life |
Endowment | Annuity |
Term life provides the greatest amount of protection for a temporary period. |
Game Title: Colorado L&H
Question: 65Complete the application and review the information with the customer prior to obtaining the customer’s signature, then send the application off to the insurance company | Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company |
Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company | Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company |
Game Title: Colorado L&H
Question: 66Immediate annuity | Flexible premium deferred annuity |
Variable annuity | Straight life annuity |
Immediate annuities start providing income payments usually starting within 30 days from the purchase date. |
Game Title: Colorado L&H
Question: 67Medical Information Bureau ( | National Association of Insurance Commissioners (NAIC) |
State government | State underwriting Association |
Game Title: Colorado L&H
Question: 68Warranty | Estoppel |
Guarantee | Representation |
A warranty is a statement that is considered guaranteed to be true. |
Game Title: Colorado L&H
Question: 69Insurable interest | Premium payment |
Agent solicitation | Constructive delivery |
Without insurable interest, a life insurance policy would be considered a wagering contract. |
Game Title: Colorado L&H
Question: 70Conversion | Entire contract |
Owner's rights | Nonforfeiture options |
The conversion privilege allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability. |
Game Title: Colorado L&H
Question: 71Varies according to the contract | May be altered by the policyowner |
Is controlled by the NAIC | Is the same in all contracts |
The conversion period varies according to the contracts. |
Game Title: Colorado L&H
Question: 72Whole life | Term life |
Credit life | Universal life |
Whole life is designed to mature at age 100. |
Game Title: Colorado L&H
Question: 73Long term care | Waiver of premium |
Accelerated death benefit | Accidental |
Game Title: Colorado L&H
Question: 74Payor clause | Family maintenance clause |
Assignment provision | Automatic premium loan provision |
Game Title: Colorado L&H
Question: 75Interest only | Interest and dividends |
Dividends only | Neither interest nor dividends are taxable |
Some life insurance policies (known as participating policies) pay dividends to their policyholders. Dividends are generally not taxed as income to the policyowner. However, interest is taxable as income for federal income tax purposes. |
Game Title: Colorado L&H
Question: 76$500 | $250 |
$750 | $1000 |
Violating a cease and desist order may result in fines of up to $10,000 per violation (if an insurer) or up to $500 per violation (if a producer). |
Game Title: Colorado L&H
Question: 77Probability of making timely premium payments | Driving history |
If applicant is a tobacco user | Overall health of the applicant |
The purpose of these reports is to provide a picture of an applicant’s general character and reputation. |
Game Title: Colorado L&H
Question: 78Key person life policy | Universal life insurance policy |
Graded insurance policy | Executive insurance |
An architecture firm that would suffer financially from the death of a project manager should purchase a key person life policy. |
Game Title: Colorado L&H
Question: 7945 | 10 |
15 | 30 |
Game Title: Colorado L&H
Question: 80If the primary beneficiary dies before the insured | If the primary beneficiary is a minor at the time of the insured's death |
If the insured died of accidental causes | If the insured died of natural causes |
Game Title: Colorado L&H
Question: 81It highlights the critical parts of the policy issued | It details the commissions earned by the agent |
It guarantees a policy will be issued | It allows the consumer to compare the costs of different policies |
Game Title: Colorado L&H
Question: 82Insurer | Producer |
The department of insurance | Life and health guaranty association |
All advertisements, regardless of by whom written, created, designed or presented, are the responsibility of the insurer whose policies are advertised - even if they aren't directly aware of them. |
Game Title: Colorado L&H
Question: 83Income derived from the TSA is received income tax-free | TSA's are available to public school employees |
Contributions to the TSA are tax-deductible | Interest earned by TSA is tax deferred |
Upon retirement, payments received by employees from the accumulated savings in tax-sheltered annuities are treated as ordinary income. |
Game Title: Colorado L&H
Question: 84Business expenses | Funeral expense |
Tax liability | Probate cost |
Game Title: Colorado L&H
Question: 85Within 5 business days of the insurer receiving the application | At the time of application |
At the time of a policy issue | At the time of policy delivery |
When the application is not taken in person, a buyer's guide must be sent no later than five business days after the insurer receives the application. |
Game Title: Colorado L&H
Question: 86At future dates specified in the contract with no evidence of insurability required | 10 year increments |
At future dates specified in the contract with proof of insurability required | At any time while policy is active |
This rider provides specific dates on which additional life insurance policies can be bought without providing proof of insurability. |
Game Title: Colorado L&H
Question: 87When insurable interest exists | When no insurable interest exists |
With the insurer's written authorization | Never |
Game Title: Colorado L&H
Question: 88A new policy that causes an existing life insurance policy to be surrendered | A new policy issued by the same insurer as part of a conversion privilege |
A credit life insurance policy that causes an existing credit life insurance policy to be forfeited | A new group life policy that is replacing an existing group life policy |
A new policy that causes an existing life insurance policy to be surrendered would be subject to replacement regulations. |
Game Title: Colorado L&H
Question: 89Policyowner controls where the investment will go and selects the amount of the premium payment | Policyowner has no say where the investment will go but can choose the premium mode |
The investment vehicle for this type of policy is held in the insurer's general portfolio | The death benefit can vary but the policyowner has no say in the premium amount paid |
With variable universal life, the policyowner controls the investment of cash value and selects the timing and amount of premium payments. |
Game Title: Colorado L&H
Question: 90Request of the change will be refused/denied | Request will be accepted only if in writing by the insured |
Change will be made only if premiums are paid current | Change will be made immediately |
An irrevocable designation may not be changed without the written consent of the beneficiary. |
Game Title: Colorado L&H
Question: 91Grace | Incontestable |
Conversion | Reinstatement |
Game Title: Colorado L&H
Question: 92The cost | The health of the insured |
The amount of coverage being coverted | Who will be beneficiary |
Game Title: Colorado L&H
Question: 93Certificated of authority | Applications |
Policies | Claim forms |
Certificates of authority are not required to mention the Colorado fraud statue. |
Game Title: Colorado L&H
Question: 94A brochure including an untrue statement regarding competitor’s ability to pay claims | A pamphlet listing a competitor's financial rating |
A verbal statement of a competitor's complaint ratio | A truthful estimate of dividends |
Game Title: Colorado L&H
Question: 95Assign policy ownership to the bank | Utilize accelerated benefits provision |
Borrow against policy cash value and use a down payment | Name bank as a beneficiary |
Game Title: Colorado L&H
Question: 96Risk classification | Warranty review |
Insurable interest | Inspection report |
Underwriting, another term of risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates. |
Game Title: Colorado L&H
Question: 97Legal purpose (insurable interest) | Consideration |
Competent parties | Offer/acceptance |
A STOLI arrangements is used to circumvent state insurable interest statutes. |
Game Title: Colorado L&H
Question: 98Whole life and increasing term | A nonforfeiture option |
Interest-sensitive | Variable life |
A return of premium life insurance policy is whole life insurance with a death benefit rider of increasing term insurance equal to the amount of premiums paid. If the insured dies within the period of term, the beneficiary will receive face amount plus the value of all paid premiums. |
Game Title: Colorado L&H
Question: 99Income taxes plus a 10% penalty tax on $30,000 | |
All withdrawals from qualified retirement plans are taxable as current income and any withdrawals made before age 59 ½ is subject to additional tax penalty of 10% if the amount withdrawn. |
Game Title: Colorado L&H
Question: 100Entire cash surrender value is taxable | Premiums are normally not tax deductible |
Cash dividends are normally not taxed | Proceeds are received tax-free if there is a named beneficiary |
The total cash surrender value is NOT taxable but the interest gained is taxable. |
Game Title: Colorado L&H
Question: 101Modified Premium Life | Endowment |
Graded premium life | Straight life |
Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter. |
Game Title: Colorado L&H
Question: 102Family Maintenance Policy | Family lump sum policy |
Family survivor policy | Family income policy |
A family maintenance policy pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period. |
Game Title: Colorado L&H
Question: 103Date of death | Date insurer is notified of the death claim |
Date claim is received by insurer | Date claim is postmarked |
Interest on a death claim is payable beginning from the date of death. |
Game Title: Colorado L&H
Question: 104$20,000 | $40,000 |
$0 | The premiums that G paid in to the policy |
Colorado does not allow an insurer to deny a life insurance claim due to suicide after the policy has been in force for 1 year. |
Game Title: Colorado L&H
Question: 105When producer delivers policy and collects initial premium | After all medical and personal information has been evaluated |
When insurer receives initial premium from the producer | After application has been approved by the underwriters |
Game Title: Colorado L&H
Question: 106Reason stated why the policy will lapse | Notice mailed to policyowner within 10 days before the effective date of lapse |
Notice mailed to policyowner within 30 days before the effective date of lapse | Automatic premium loan explanation |
Game Title: Colorado L&H
Question: 107Endowment at age 70 | Straight life |
Modified life | Whole life paid-up at age 70 |
An endowment policy is characterized by cash values that grow at a rapid pace so that the policy matures or endows at a specified date (before age 100). |
Game Title: Colorado L&H
Question: 108Policyowner | Beneficiary |
Insured | Insurer |
The policyowner (investor) benefits upon the death of the insured. |
Game Title: Colorado L&H
Question: 1096 months | 2 months |
4 months | 8 months |
Game Title: Colorado L&H
Question: 110The replacing insurer must maintain copies of all records regarding the replacement for at least 5 years | The producer must maintain copies of all records regarding the replacement for at least 5 years |
The insurer whose policy is being replaced must keep all records regarding the replacement for at least 5 years | All parties must maintain copies of all records regarding the replacement for at least 10 years |
Game Title: Colorado L&H
Question: 111Writing controlled business | Selling insurance without a license |
Engaging in fraudulent activity | Endangering the public |
Game Title: Colorado L&H
Question: 112The licensee’s total premiums on controlled business exceeded the total premiums on all other business | The license wrote more than 10 policies on controlled business |
The license wrote policies totaling more than $25,000 on controlled business | The licensee's total premiums on controlled business made up more than 25% of his total premiums |
Game Title: Colorado L&H
Question: 113A minimum number of employees is required to participate | All eligible employees must be covered |
No evidence of insurability required | Must have conversion rights |
Game Title: Colorado L&H
Question: 114Amount of the benefits available from other sources | Insured's tax bracket |
Nature of the disability | Insured's education level |
Game Title: Colorado L&H
Question: 115When the application is made | When the insured dies |
Within the incontestability period | Before the insured dies |
Insurable interest must exist when the application is made for it to be valid. |
Game Title: Colorado L&H
Question: 116Signed HIPAA disclosure | Signed amendment |
Signed statement of good health | The required premium |
The HIPPA disclosure should be taken at the time of sale with the application. |
Game Title: Colorado L&H
Question: 117Age 100 | Age 65 |
When premium payments stop | At the discretion of the insurer |
Even though the premium payments are limited to a certain period, the insurance protection extends until the insured's death, or to age 100. |
Game Title: Colorado L&H
Question: 118Contest a claim during the Contestable period | Disallow a change of ownership throughout the contestable period |
Disallow a change of beneficiary during the contestable period | Contest a claim at anytime if the cause of death was accidental |
The incontestable clause or provision specifies that after a certain period of time (usually two years from the issue date), the insurer no longer has the right to contest the validity of the life insurance policy so long as the contract continues in force. |
Game Title: Colorado L&H
Question: 119$10,000 | $500 |
$1,000 | $5,000 |
Game Title: Colorado L&H
Question: 120Entire contract provision | Application provision |
Policy exclusions provision | Incontestability provision |
The entire contact provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. |
Game Title: Colorado L&H
Question: 121Company X | Company Y |
The employee's estate | The employee's family |
With key person insurance, the company purchases, own, pays the premiums and is the beneficiary of the life insurance policy on the key person. |
Game Title: Colorado L&H
Question: 122Face amount plus the policy's cash value | Face amount plus the policy's dividends |
The greater amount plus the policy's death benefit or the cash value | Face amount plus total premium paid throughout the life of the policy |
A face amount plus cash value policy is a contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value. |
Game Title: Colorado L&H
Question: 123Policy's guaranteed dividend table | Policy's loan interest rate |
Policy's premium | Policy's cash value table |
Game Title: Colorado L&H
Question: 124Whole life policy with an other insured rider | Endowment with extended term |
Endowment with a payor benefit | Family income policy |
In this situation, the applicant purchased a whole life policy with an other insured rider. |
Game Title: Colorado L&H
Question: 125Higher Premiums | Lower premiums |
Average premiums | Graded premiums |
The more frequent a policy's premiums are paid throughout the course of the year, the higher the premiums will be. |
Game Title: Colorado L&H
Question: 126Issued in an amount not to exceed the amount of the loan | Issued in any amount at the discretion of the applicant |
Used in the event of loss of income | Coverage that waives the premiums on a loan payment in the event of total disability |
Credit life insurance is designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid. |
Game Title: Colorado L&H
Question: 127Conditional receipt | Binding receipt |
Warranty receipt | Backdated receipt |
A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be acceptable risk. |
Game Title: Colorado L&H
Question: 1285 business days | 10 business days |
15 business days | 20 business days |
Game Title: Colorado L&H
Question: 129Who the policyowner is and what rights the policyowner is entitled to | Who the beneficiary is and what rights the beneficiary is entitled to |
Ownership cannot be assigned after the incontestable period | Allows the policyowner to adjust the death benefit and premium amount at anytime |
The ownership clause in a life insurance policy is a provision that indicates who is the policyowner and provides a general description of the owner's rights. |
Game Title: Colorado L&H
Question: 130Variable | Deferred |
Flexible | Fixed |
A variable annuity’s cash value will depend on the results of its investment funds. |
Game Title: Colorado L&H
Question: 131Unemployment | Survivorship |
Disability | Retirement |
Game Title: Colorado L&H
Question: 132At the time of application | After the contestable period |
When the policy proceeds are paid | When the insured dies |
With life insurance, insurable interest must exist only at the policy inception. |
Game Title: Colorado L&H
Question: 133Both an insurance and securities product | An insurance product only |
A securities product only | The insurance company assumes the investment risk |
Variable whole life insurance is both an insurance and securities product. |
Game Title: Colorado L&H
Question: 134Beneficiary | Adult insured |
Policyowner | Agent |
All of the following individuals must sign a life insurance application EXCEPT the beneficiary. |
Game Title: Colorado L&H
Question: 135100% | 25% |
50% | 75% |
The percentage of eligible employees participating in a non-contributory plan is required to be at 100%. |
Game Title: Colorado L&H
Question: 136Paid-up additional insurance | Cash option |
Reduced premiums | Accumulate with interest |
Game Title: Colorado L&H
Question: 137Rebating | Defamation |
Twisting | Conservation |
A producer who offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy is committing the illegal act of rebating. |
Game Title: Colorado L&H
Question: 138K will forfeit he right to use the automatic loan provision upon reinstatement | K must reinstate within a state period |
K must pay back interest and premiums | K must provide evidence of insurability |
Game Title: Colorado L&H
Question: 13920-pay life | Paid-up at 65 |
30-pay life | Straight whole life |
In this situation, a 20-pay life policy offers the quickest accumulation of cash value. |
Game Title: Colorado L&H
Question: 140Expires at the end of the policy period | Builds cash value |
Has nonforfeiture options | Endows at the end of the policy period |
With term insurance, the policy expires at the end of the policy period. |
Game Title: Colorado L&H
Question: 141Life income | Interest only |
Fixed period | Fixed amount |
The life income settlement options pays a specified amount to the annuitant with no residual value payable to a beneficiary. |
Game Title: Colorado L&H
Question: 142Guaranteed | Risk-free |
Investment | Savings |
"Guaranteed" is an allowable word in the advertisement of life insurance or annuities. |
Game Title: Colorado L&H
Question: 143More than 60% of plan assets are in key employee accounts | More than 30% of plan assets are in key employee accounts |
More than 40% of plan assets are in key employee accounts | More than 50% of plan assets are in key employee accounts |
Game Title: Colorado L&H
Question: 144Exclusion | Misrepresentation |
Collateral assignment | Concealment |
Exclusion are specified hazards listed in a policy for which benefits will not be paid. |
Game Title: Colorado L&H
Question: 145Returning a portion of premium as inducement to purchase insurance | Cancellation of an insurance policy without cause |
Sale of mass-marketed insurance products | Offer of temporary insurance coverage |
Returning a portion of a premium as inducement to purchase insurance is an example of rebating. |
Game Title: Colorado L&H
Question: 146Morbidity rate | Mortality rate |
Insurer's expenses | Interest credit |
Game Title: Colorado L&H
Question: 147Investor-Originated Life Insurance | A contract of adhesion |
An indemnity contract | Key person insurance |
Investor-originated life insurance (or IOLI) is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premium, then collect the death benefit when the insured dies. |
Game Title: Colorado L&H
Question: 148Promise to pay a death benefit to a named beneficiary | Promise to never cancel coverage |
Promise to not raise premiums | Promise to accept an insured's assignment of benefits |
Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary. |
Game Title: Colorado L&H
Question: 149Taxed as ordinary income | Partially taxable |
Tax deductible | Nontaxable |
Accumulated interest earned on dividends from an insurance policy is taxed as ordinary income. |
Game Title: Colorado L&H
Question: 150Insured can determine the benefit amount | Conversion privilege |
Insured can name of beneficiary | Minimum participation requirements |
All of these must be allowed in employer noncontributory group life policies EXCEPT "insured can determine the benefit amount". |