List of Tables... xxiii List of Abbreviations...xxv Definition of a life insurance contract... 6

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1 Table of Contents xv Table of Contents List of Tables... xxiii List of Abbreviations...xxv Chapter 1 Life insurance 1.1. Definition of a life insurance contract Definition of a contract of insurance Characteristics of a contract of insurance Types of contracts Individual life insurance Multi-life insurance First-to-die or last survivor life insurance Benefits paid First-to-die life insurance Last survivor life insurance Two types of last survivor insurance Setting premiums Mortality rate Rate factor Mortality table Constructing a mortality table How insurers use mortality tables The main factors affecting mortality rates Expected interest rate Administration charges Risk levels Ranges of face amount The rate manual or rate information software Level premiums The premium calculation process Basic principles of insurance of persons Mutual benefit... 26

2 xvi Life Insurance Equitable sharing The law of large numbers Creation of a reserve Meeting commitments to the insured...28 Self-Evaluation Exercise Answer Sheet for the Self-Evaluation Exercise Review activity Chapter 2 Types of contracts 2.1. Term life insurance Primary characteristics Types of term life insurance Term life insurance with a fixed face amount Decreasing term life insurance Family annuity insurance Mortgage insurance Loan insurance Permanent life insurance Primary characteristics Primary clientele Types of permanent life insurance Whole life insurance Limited payment whole life insurance Life insurance to Endowment insurance Policy dividends Dividend sources Dividend payment options Cash surrender value Non-forfeiture options Reducing the value of the policy (reduced paid-up value) Extending the term insurance value (extended value) Automatically advancing the premium Policy advance... 61

3 Table of Contents xvii 2.3. Universal life insurance Primary characteristics Types of universal life insurance Death benefits Life insurance illustration and interest rate used How universal life insurance works Taxation of universal life insurance Investment choices for universal life insurance Interest bonus Guaranteed issue life insurance Primary clientele Self-Evaluation Exercise Answer Sheet for the Self-Evaluation Exercise Review activity Chapter 3 General clauses of a life insurance contract 3.1. The face page Table of guaranteed values General provisions Contract content Definitions Suicide Incontestability Amendments Premium payments Grace period Payment options Lapsed contract Reinstatement Express request Evidence of insurability Payment of overdue premiums

4 xviii Life Insurance Loan repayments Claim provision Proof of death Proof of age of the insured Claimant s proof of entitlement Benefit payment terms and conditions Assignment clause Beneficiary designation Other documents Benefits and endorsements Basic benefit Endorsements Additional benefits The application form How to fill out the application form Description of the application Section 1 of the insurance application Section 2 of the insurance application Section 3 of the insurance application Section 4 of the insurance application Interim cover note Settlement options Lump sum Interest option Fixed-amount annuity Fixed-period annuity Other settlement or payment guarantee options Living death benefit Contract period Contract renewal End of contract Termination of contract Cancellation of contract

5 Table of Contents xix Self-Evaluation Exercise Answer Sheet for the Self-Evaluation Exercise Review activity Chapter 4 Additions to life insurance contracts 4.1. Endorsements Endorsements Term insurance Family annuity endorsement Family insurance (for spouses and children) Health endorsement Additional benefits Accidental death and dismemberment (AD&D) benefit Accidental death and dismemberment (AD&D) benefit Applicability of AD&D benefits Waiver of premiums Waiver of premiums in the event of the insured s disability Waiver of premiums in the event of policyholder disability Suspension of premium payment Total disability Waiver of premiums in the event of policyholder death Disability annuity benefit Accidental fracture benefit Guaranteed insurability benefit Financial insurability benefit Refund of premiums Suicide False representations and concealment of risk Self-Evaluation Exercise Answer Sheet for the Self-Evaluation Exercise Review activity

6 xx Life Insurance Chapter 5 Needs analysis 5.1. Assessing the current situation Personal information Date of birth Male or female Smoker or non-smoker Job description Disposable income Time Regularity of income Dependants Goals Priorities Budget Reasons to prepare a budget Objective Types of income Balancing income and expenses Personal balance sheet Estate balance sheet Death-related expenses Effective insurance Defining actual needs Components of a needs analysis Determining the consumer s current situation Identifying the consumer s specific needs Determining the shortfall Tools Calculation table Calculating the required capital Economic value of monetary loss Income insurance needs Financial document review Tax considerations Recommending a solution Fundamental questions...199

7 Table of Contents xxi How much? Starting when? For how long? What type of coverage? Business partners Self-Evaluation Exercise Answer Sheet for the Self-Evaluation Exercise Review activity Chapter 6 Target markets and corresponding scenarios 6.1. Target markets Insurance of persons Singles without children Singles with children Children Married couples without children Married couples with children Common-law spouses Sole proprietor Partners in a partnership or shareholders in a company Holders of personal or mortgage loans Decreasing coverage Fixed coverage Case studies Single person with children or single-parent family The scenario Possible solutions Recommendations Married couples with children The scenario Possible solutions Recommendations Married couples without children The scenario

8 xxii Life Insurance Possible solutions Recommendations Review activity Appendix A Example of the Main Part of a Life Insurance Contract with Renewal Clauses Appendix B Excerpt from the Code of Ethics of the Chambre de la sécurité financière (Sections 9 to 29) Appendix C Study Schedule Appendix D Study Plan Bibliography Index Lexicon