Colorado Life Insurance Study Questions
with Verified Answers
Annuities - ✔✔Upside down life insurance, tax deferred savings for retirement,
protects people from living too long
Immediate Annuities (SPIA) - ✔✔Single lump-sum premium, payments to insured can
start one month after or latest delay of 1 year, only interest part of payment is subject to tax
Deferred Annuities (SPDA) - ✔✔Owner chooses amount and frequency of premium
payments (flexible), accumulated funds can be withdrawn at any time but may have surrender
charge
Fixed Annuities - ✔✔Guaranteed against loss, supported by general account with
assets, earn interest during accumulation period, level payment during annuity period
Variable Annuities - ✔✔Supported by investments, not guaranteed against loss, separate
account with investment risks, value expressed in accumulation units (like shares), annuity
units can fluctuate with investments which can adjust the payments to the insured, regulated
as insurance and securities (dual regulation)
Equity-Indexed Annuities (EIA) - ✔✔Fixed, interest linked to equity index,
guarantees minimum interest rate (normally 1-3%), guarantees backed by insurer's
general account
Joint Life Policy - ✔✔Covers two or more lives with death benefit being paid when
first insured dies, helps other spouse/insured maintain a certain lifestyle
Survivorship Policy - ✔✔Covers two individuals and will pay death benefit when last
insured dies, can help pay for estate settlements and other expenses after death
, Life Policy Rider - ✔✔Add benefits to life insurance policy, similar to endorsement
on personal and commercial lines
Waiver of Premium Rider - ✔✔Will pay premiums if policyholder becomes disabled so
they can continue to have coverage for duration of policy
- waiting period - insured cannot work for 90-180 days
- if insured still disabled at end of period, company retroactively refunds any premiums
paid during waiting period
- if insured permanently disabled before age 60-65 premiums will be waived for life
Waiver of Monthly Deductions Rider - ✔✔For flexible premium policies (UL), suspends
monthly cost of insurance deductions that are made from cash account instead of
waiving premiums
Payor Benefit Rider - ✔✔Juvenile policies, if person responsible for premiums
(parents/guardians) becomes disables or dies before child is an adult, premiums will be waived
until child reaches stated age (usually 18 or 21)
Guaranteed Insurability Rider (GIR) - ✔✔Normally on permanent life, allows owner
to purchase additional life insurance in future for certain amounts without evidence of
insurability, must be exercised typically between ages 25 and 40 at 3 year intervals
Term Rider - ✔✔Added to permanent policy, premiums lower than purchasing separate
policy, both death benefits paid to beneficiary, expires at certain age or after certain amount
of years
Return of Premium Rider - ✔✔Increasing term rider, death benefit totals all premiums
paid, death must occur while rider in force
with Verified Answers
Annuities - ✔✔Upside down life insurance, tax deferred savings for retirement,
protects people from living too long
Immediate Annuities (SPIA) - ✔✔Single lump-sum premium, payments to insured can
start one month after or latest delay of 1 year, only interest part of payment is subject to tax
Deferred Annuities (SPDA) - ✔✔Owner chooses amount and frequency of premium
payments (flexible), accumulated funds can be withdrawn at any time but may have surrender
charge
Fixed Annuities - ✔✔Guaranteed against loss, supported by general account with
assets, earn interest during accumulation period, level payment during annuity period
Variable Annuities - ✔✔Supported by investments, not guaranteed against loss, separate
account with investment risks, value expressed in accumulation units (like shares), annuity
units can fluctuate with investments which can adjust the payments to the insured, regulated
as insurance and securities (dual regulation)
Equity-Indexed Annuities (EIA) - ✔✔Fixed, interest linked to equity index,
guarantees minimum interest rate (normally 1-3%), guarantees backed by insurer's
general account
Joint Life Policy - ✔✔Covers two or more lives with death benefit being paid when
first insured dies, helps other spouse/insured maintain a certain lifestyle
Survivorship Policy - ✔✔Covers two individuals and will pay death benefit when last
insured dies, can help pay for estate settlements and other expenses after death
, Life Policy Rider - ✔✔Add benefits to life insurance policy, similar to endorsement
on personal and commercial lines
Waiver of Premium Rider - ✔✔Will pay premiums if policyholder becomes disabled so
they can continue to have coverage for duration of policy
- waiting period - insured cannot work for 90-180 days
- if insured still disabled at end of period, company retroactively refunds any premiums
paid during waiting period
- if insured permanently disabled before age 60-65 premiums will be waived for life
Waiver of Monthly Deductions Rider - ✔✔For flexible premium policies (UL), suspends
monthly cost of insurance deductions that are made from cash account instead of
waiving premiums
Payor Benefit Rider - ✔✔Juvenile policies, if person responsible for premiums
(parents/guardians) becomes disables or dies before child is an adult, premiums will be waived
until child reaches stated age (usually 18 or 21)
Guaranteed Insurability Rider (GIR) - ✔✔Normally on permanent life, allows owner
to purchase additional life insurance in future for certain amounts without evidence of
insurability, must be exercised typically between ages 25 and 40 at 3 year intervals
Term Rider - ✔✔Added to permanent policy, premiums lower than purchasing separate
policy, both death benefits paid to beneficiary, expires at certain age or after certain amount
of years
Return of Premium Rider - ✔✔Increasing term rider, death benefit totals all premiums
paid, death must occur while rider in force
