Term Life Insurance

KNOWLEDGE EXPECTED OF: QAFP® 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 term life insurance.1
  • Explain for whom term insurance may be suitable.  
  • Identify types of term life insurance policies, such as:
    • 5-year
    • 10-year
    • 20-year
    • Annual Renewable Term
    • Term-65 
  • Explain advantages and disadvantages of term life insurance.  
  • Explain options available upon maturity of a term life insurance policy. 
  • Estimate the need for term insurance. 
  • Explain the relationship between an individual’s age and the premium for a term life insurance policy.
    • During the term of the contract
    • Upon maturity / At renewal 
  • Calculate the amount that may be payable from a term life insurance policy.
    • As a beneficiary
    • As a policyholder
  • Explain how each of these factors may impact the decision to purchase term 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 living
    • Impact on future goals
    • Estate planning objectives
    • Personal attitudes towards 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 decision to purchaseterm insurance.
  • Explain how each of these factors may impact the decision to renew or convert a term life insurance policy: 
    • Need for insurance
    • Goals
    • Insurability
    • Affordability
    • Cost of establishing new policy
  • Evaluate how each of the factors may impact the decision to renew or convert a term life insurance 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 term life insurance.1
  • Explain for whom term insurance may be suitable.  
  • Identify types of term life insurance policies, such as:
    • 5-year
    • 10-year
    • 20-year
    • Annual Renewable Term
    • Term-65 
  • Explain advantages and disadvantages of term life insurance.  
  • Explain options available upon maturity of a term life insurance policy. 
  • Estimate the need for term insurance. 
  • Explain the relationship between an individual’s age and the premium for a term life insurance policy.
    • During the term of the contract
    • Upon maturity / At renewal 
  • Calculate the amount that may be payable from a term life insurance policy.
    • As a beneficiary
    • As a policyholder
  • Explain how each of these factors may impact the decision to purchase term 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 living
    • Impact on future goals
    • Estate planning objectives
    • Personal attitudes towards 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 decision to purchaseterm insurance.
  • Explain how each of these factors may impact the decision to renew or convert a term life insurance policy: 
    • Need for insurance
    • Goals
    • Insurability
    • Affordability
    • Cost of establishing new policy
  • Evaluate how each of the factors may impact the decision to renew or convert a term life insurance policy. 

REFERENCES

1 https://www.canada.ca/en/financial-consumer-agency/services/insurance/life.html  
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