CARD T067
Insurability Rider (Guaranteed Insurability)
A rider allowing additional coverage at specified times without new evidence of insurability, subject to its terms. It does not necessarily freeze the premium rate.
How it works
A guaranteed-insurability option permits additional insurance at specified dates or events without new evidence, within stated amount and age limits. The owner must exercise it properly and pay for the added coverage. Premiums for the increase commonly use the insured’s attained age; the rider does not guarantee the original price forever. [21] [22]
At a scheduled option date, an eligible owner increases the benefit despite a health change. The additional amount requires its own premium under the rider’s pricing rules.
Guaranteed insurability protects the ability to buy eligible added coverage—not unlimited amounts or free coverage.
Practice Insurability Rider (Guaranteed Insurability) · 3 questions
CARD T068
Policy Illustration
A presentation of how policy values or benefits may develop. Guaranteed values must be distinguished from projections that can change.
How it works
An illustration shows how benefits, premiums, and values may develop under specified assumptions. Read guaranteed and nonguaranteed columns separately. Nonguaranteed interest, dividends, and charges can change actual outcomes; a projected premium schedule may not sustain coverage if assumptions fail. An in-force illustration can update an existing policy’s outlook. [18]
A universal life illustration shows a higher account value under current assumptions than under guarantees. The higher number is a projection, not an additional contractual guarantee.
Illustrated performance is not promised performance. The guarantee column and policy provisions matter.
CARD T069
Buyer’s Guide
An educational document explaining insurance choices and buying considerations. It helps buyers understand products before selecting coverage.
How it works
A buyer’s guide explains basic product choices and questions to consider before purchase. It is general education, unlike a policy summary describing a particular contract or an illustration projecting values. Delivery requirements are state-specific. The guide supports informed comparisons rather than recommending the same product to every buyer. [10]
A prospective buyer reads about term and permanent coverage before reviewing the details of one insurer’s proposed policy.
Buyer’s guide = general education. Policy summary = specific policy. Illustration = values under stated assumptions.
CARD T070
Policy Summary
A document summarizing important features of a particular policy. It may identify premiums, benefits, and applicable values.
How it works
A policy summary identifies important features of a particular policy, such as coverage, premiums, and applicable values. It helps comparison but is not the entire contract. A buyer’s guide is broader education; an illustration presents development under stated assumptions. Required content and delivery timing follow applicable rules. [10]
A buyer compares the summary’s scheduled premiums and death benefit for a proposed policy with the features of existing coverage.
A summary is useful for review, but omitted exclusions or conditions do not disappear from the contract.
CARD T071
Stranger-Originated Life Insurance (STOLI)
An arrangement initiated for investors lacking a legitimate insurable interest to benefit from someone’s life insurance. It differs from ordinary family protection.
How it works
STOLI concerns origination: a policy is arranged from the outset for investors who lack the required insurable interest. A later lawful sale of a legitimately obtained policy is a different issue and is subject to settlement rules. The presence of a trust or premium financing does not by itself establish legitimate interest or prove STOLI; examine the actual arrangement. [19]
Investors recruit an unrelated person to obtain a new policy for their benefit from the beginning, without a legitimate insurable interest. That raises the STOLI concern.
A planned stranger-investor scheme at inception is different from every subsequent transfer of an existing policy.
Practice Stranger-Originated Life Insurance (STOLI) · 3 questions
APPLY THE TERMS
Practice questions
Select an answer, then check it to see why each option is right or wrong.
T067 · Insurability Rider (Guaranteed Insurability)
0 of 3 answered
T068 · Policy Illustration
0 of 3 answered
T069 · Buyer’s Guide
0 of 3 answered
T070 · Policy Summary
0 of 3 answered
T071 · Stranger-Originated Life Insurance (STOLI)
0 of 3 answered
Sources & further reading
Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.