Permanent Life Insurance
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
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|---|---|---|---|---|---|---|---|---|---|
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Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Explain the purpose of permanent life insurance.1
- Explain for whom permanent insurance may be suitable.
- Define the types of permanent life insurance.
- Term-to-100
- Whole life
- Universal life
- Explain advantages and disadvantages of the types of permanent life insurance.
- Estimate the need for permanent insurance.
- Determine how each of these factors may impact the suitability of permanent insurance:
- Likelihood of risk occurring
- Financial impact should risk occur
- Ability to self-fund the potential loss (using income, liquidation of assets)
- Tax impacts (associated with disposition of property and liquidation of assets)
- Impact on standard of life
- Impact on future goals
- Estate planning objectives
- Personal attitudes toward the use of insurance
- Length of coverage required
- Permanency of coverage required
- Age of life insured
- Health of life insured
- Cash flow available for premiums
- Policy features
- Evaluate how each of the factors may impact the suitability of permanent insurance.
Term-to-100
- Explain for whom a term-to-100 insurance may be suitable.
- Explain attributes of a term-to-100 life insurance policy, such as:
- Constancy of death benefit
- Constancy of premiums
- Period over which premiums are payable
- Period over which coverage is in effect
Whole Life Insurance
- Explain for whom a whole life insurance policy may be suitable.
- Explain attributes of a whole life insurance policy, such as:
- Constancy of death benefit
- Constancy of premiums
- Period over which premiums are payable
- Period over which coverage is in effect
- Cash values
- Define terms associated with a whole life insurance policy, such as:
- Reserve
- Cash value
- Cash surrender value
- Participating policy
- Non-participating policy
- Dividends
- Explain options available to an individual when receiving a dividend from a whole life insurance policy.
- Receive as cash
- Use to automatically reduce the premium
- Used to pay-up a policy or purchase additional insurance
- Accumulate it within the policy
- Use to purchase reducing term insurance
- Explain how premiums may be offset using dividends.
- Explain the impact to an individual when receiving a dividend from a whole life insurance policy.
- Impact on amount of insurance coverage
- Tax impact
- Explain payment options for a whole life insurance policy.
- Level premium payment
- Limited payment (i.e., paid up over shorter time period)
Universal Life
- Explain for whom a universal life policy may be suitable.
- Explain attributes of a universal life insurance policy, such as:
- Variability of death benefit
- Variability of premiums/contributions
- Variability of cost of insurance (yearly renewable term, level term)
- Period over which premiums are payable
- Period over which coverage is in effect
- Cash values
- Number of lives that may be insured
- Explain the concept of how universal life insurance works.
- Explain the coverage amounts / death benefit options available on universal life insurance policies, such as:
- Level death benefit
- Level death benefit plus account value
- Level death benefit plus accumulated deposits
- Indexed death benefit
- Identify types of investments that may be held within a universal life insurance policy, such as:
- Guaranteed types of investments
- Variable types of investments
- Explain the potential impact of the choice of investments on a universal life insurance policy.
- On the value of the investment
- On the value of the insurance
- On the premium (contributions) required
Endowment Policies
- Define an endowment policy.
REFERENCES
1 https://www.canada.ca/en/financial-consumer-agency/services/insurance/life.html
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Explain the purpose of permanent life insurance.1
- Explain for whom permanent insurance may be suitable.
- Define the types of permanent life insurance.
- Term-to-100
- Whole life
- Universal life
- Explain advantages and disadvantages of the types of permanent life insurance.
- Estimate the need for permanent insurance.
- Determine how each of these factors may impact the suitability of permanent insurance:
- Likelihood of risk occurring
- Financial impact should risk occur
- Ability to self-fund the potential loss (using income, liquidation of assets)
- Tax impacts (associated with disposition of property and liquidation of assets)
- Impact on standard of life
- Impact on future goals
- Estate planning objectives
- Personal attitudes toward the use of insurance
- Length of coverage required
- Permanency of coverage required
- Age of life insured
- Health of life insured
- Cash flow available for premiums
- Policy features
- Evaluate how each of the factors may impact the suitability of permanent insurance.
Term-to-100
- Explain for whom a term-to-100 insurance may be suitable
- Explain attributes of a term-to-100 life insurance policy, such as:
- Constancy of death benefit
- Constancy of premiums
- Period over which premiums are payable
- Period over which coverage is in effect
Whole Life Insurance
- Explain for whom a whole life insurance policy may be suitable.
- Explain attributes of a whole life insurance policy, such as:
- Constancy of death benefit
- Constancy of premiums
- Period over which premiums are payable
- Period over which coverage is in effect
- Cash values
- Define terms associated with a whole life insurance policy, such as:
- Reserve
- Cash value
- Cash surrender value
- Participating policy
- Non-participating policy
- Dividends
- Explain options available to an individual when receiving a dividend from a whole life insurance policy.
- Receive as cash
- Use to automatically reduce the premium
- Used to pay-up a policy or purchase additional insurance
- Accumulate it within the policy
- Use to purchase reducing term insurance
- Explain how premiums may be offset using dividends.
- Explain the impact to an individual when receiving a dividend from a whole life insurance policy.
- Impact on amount of insurance coverage
- Tax impact
- Explain payment options for a whole life insurance policy.
- Level premium payment
- Limited payment (i.e., paid up over shorter time period)
Universal Life
- Explain for whom a universal life policy may be suitable.
- Explain attributes of a universal life insurance policy, such as:
- Variability of death benefit
- Variability of premiums/contributions
- Variability of cost of insurance (yearly renewable term, level term)
- Period over which premiums are payable
- Period over which coverage is in effect
- Cash values
- Number of lives that may be insured
- Explain the concept of how universal life insurance works.
- Explain the coverage amounts / death benefit options available on universal life insurance policies, such as:
- Level death benefit
- Level death benefit plus account value
- Level death benefit plus accumulated deposits
- Indexed death benefit
- Identify types of investments that may be held within a universal life insurance policy, such as:
- Guaranteed types of investments
- Variable types of investments
- Explain the potential impact of the choice of investments on a universal life insurance policy.
- On the value of the investment
- On the value of the insurance
- On the premium (contributions) required
Endowment Policies
- Define an endowment policy.
REFERENCES
1 https://www.canada.ca/en/financial-consumer-agency/services/insurance/life.html
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