Center for Financial Advisor Education LUTC 257 Workbook

113 Pages·2008·0.46 MB·English

by  Test Machine

Center for Financial Advisor Education

LUTC 257 Workbook

Essentials of Life Insurance Products

WB257-02-1
THE AMERICAN COLLEGE
The American College® is an independent, nonprofit, accredited institution founded in 1927.
Through a continuum of education programs, The College offers professional certification and
graduate-degree distance education to men and women seeking career growth in financial services.
At the beginning of the continuum, the Center for Financial Advisor Education at The American
College offers the LUTC Fellow (LUTCF) professional designation jointly with the National
Association of Insurance and Financial Advisors (NAIFA) and the Financial Services Specialist (FSS)
professional designation. The Center’s curriculum is designed to introduce students to the technical side
of financial services while at the same time providing them with the requisite sales training skills.
In the middle of the continuum, the Solomon S. Huebner School® of The American College
administers the Chartered Life Underwriter (CLU®); the Chartered Financial Consultant (ChFC®); the
Chartered Advisor for Senior Living (CASL®); the Registered Health Underwriter (RHU®); the
Registered Employee Benefits Consultant (REBC®); and the Chartered Leadership Fellow® (CLF®)
professional designation programs. In addition, the Huebner School also administers The College’s CFP
Board-registered education program, the CFP Certification Curriculum, for those individuals interested
in pursuing CFP® certification.
Finally, at the advanced end of the continuum, the Richard D. Irwin Graduate School® of The
American College offers the master of science in financial services (MSFS) degree; the master of
science in management (MSM) degree with an emphasis in leadership; the Chartered Advisor in
Philanthropy (CAP®) professional designation; the Graduate Financial Planning Track (another CFP
Board-registered education program), and several graduate-level certificates that concentrate on specific
subject areas. The National Association of Estate Planners & Councils has named The College as the
provider of the education required to earn its prestigious Accredited Estate Planner (AEP) designation.
The American College is accredited by the Commission on Higher Education of the Middle States
Association of Colleges and Schools, 3624 Market Street, Philadelphia, PA 19104; telephone number:
[phone]. The Commission on Higher Education is an institutional accrediting agency recognized
by the U.S. Secretary of Education and the Commission on Recognition of Postsecondary
Accreditation.
The American College does not discriminate on the basis of race, religion, sex, handicap, or
national and ethnic origin in its admissions policies, educational programs and activities, or employment
policies.
The American College is located at 270 S. Bryn Mawr Avenue, Bryn Mawr, PA 19010. The toll-
free telephone number of the Office of Student Services is (888) AMERCOL (263-7265); the fax
number is [phone]; and the home page address is http://www.theamericancollege.edu.
______________________________________________________________________________
Certified Financial Planner Board of Standards, Inc., owns the marks CFP®, CERTIFIED FINANCIAL PLANNERTM, and CFP
(with flame logo®), which it awards to individuals who successfully complete initial and ongoing certification requirements.

Copyright © 2008
The American College Press
All rights reserved
Essentials of Life Insurance Products
Assignment Schedule

This Workbook contains quizzes, exercises, projects, and case studies that are intended to supplement
the material in Chapters 1 through 8 of the LUTC 257 textbook, Essentials of Life Insurance Products.

Pag e in Pag e in
Class Assignments Text Workbook

Basic Principles of Life Insurance
1
Readings:
1-1
Learning Objectives

Basic Principles of Life Insurance 1-2
____
Human Life Value 1-18
Date
Life Insurance Needs 1-23
The Selling/Planning Process for Life Insurance 1-37
Chapter One Review 1-41
Special Notes to Advisors W-7
Course Overview and Expectations (Read before Class 2) W-9
Acknowledgment of Course Requirements (Due Class 2) W-17
Essentials of Life Insurance Products Pre-Test W-19
Sales Planning Project 1—Matching Needs and Products
(Begin, Due Class 4) W-21
Breakout—Class 1 W-27
Most Valuable Concepts W-113
Life Insurance Needs in Personal and Business Planning
2 Readings:
Learning Objectives 2-1
Approaches to Determining the Life Insurance Need 2-2
_____ Business Uses of Life Insurance 2-19
Date Chapter Two Review 2-43
Acknowledgment of Course Requirements (Due today) W-17
Quiz—Class 1 (Due today) W-29
Quiz—Class 2 (Due today) W-33
Action Project 1—Identifying Prospect Needs (Begin,
(Due Class 4) W-37
Sales Planning Project 2—Analyzing the Life
Insurance Need (Due Class 3) W-45
Breakout—Class 2 W-49
Most Valuable Concepts W-113

Workbook W-3
Pa ge Pag e in
Class Assignments in Text Workbook

Term Life Insurance
3
Readings:

Learning Objectives 3-1

Who are Today’s Life Insurance Buyers? 3-2
____
Term Insurance 3-6
Date
Marketing, Prospecting and Approach 3-30
Chapter Three Review 3-43
Quiz—Class 3 (Due today) W-51
Sales Planning Project 2—Analyzing the Life Insurance Need
(Due today) W-45
Sales Planning Project 3—Your Product Portfolio (Begin, Due
Class 5) W-55
Breakout—Class 3 W-61
Most Valuable Concepts W-113
Whole Life Insurance
4 Readings:
Learning Objectives 4-1
Whole Life Insurance 4-2
_____ Term versus Permanent: The Age Old Question 4-28
Date Meet the Prospect 4-34
Chapter Four Review 4-41
Quiz—Class 4 (Due today) W-63
Action Project 1—Identifying Prospect Needs (Due
Today) W-37
Sales Planning Project 1—Matching Needs and
Products (Due Today) W-21
Action Project 2—Term/Whole Comparison
(Begin, Due Class 6) W-67
Sales Planning Project 4—Interview an Experienced
Life Insurance Advisor (Begin, Due Class 6) W-73
Breakout—Class 4 W-77
Most Valuable Concepts W-113

W-4 Essentials of Life Insurance Products
Pa ge Pag e in
Class Assignments in Text Workbook
Variable and Universal Life Insurance

Readings:
5
Learning Objectives
5-1
Variable Life Insurance
5-2
The Income Tax Definition of Life Insurance
____ 5-8
Universal Life Insurance
Date 5-11
Variable Universal Life Insurance
5-27
The Information-Gathering Interview
5-33
Analyzing the Information
5-35
Chapter Five Review
5-41
Quiz—Class 5 (Due today)
W-79
Sales Planning Project Project 3⎯Your Product

Portfolio (Due Today)
W-55
Action Project 3⎯Life Insurance Illustrations

(Begin, Due Class 7)
W-83
Sales Planning Project 5—Optional Provisions

(Begin, Due Class 7)
W-89
Breakout—Class 5
W-93
Most Valuable Concepts
W-113

Comparing Costs and Policy Illustrations
6 Readings:
Learning Objectives 6-1
Methods of Comparing Life Insurance Policy 6-2
____ Costs
Date Life Insurance Illustrations 6-13
Developing and Presenting the Plan 6-33
Chapter Six Review 6-40
Tables—Cost Comparison Methods 6-44
Quiz—Class 6 (Due today) W-95

Action Project 2—Term/Whole Life Comparison

(Due today) W-67
Sales Planning Project 4—Interview an Experienced
Life Insurance Advisor (Due today) W-73
Breakout—Class 6 W-99
Most Valuable Concepts W-113

Workbook W-5
Page Page in
Class Assignments
in Text Workbook
Policy Provisions
7 Readings:
Learning Objectives 7-1
Policy Provisions 7-2
____ Settlement Agreements 7-26
Date Implementing the Plan 7-35
Chapter Seven Review 7-41
Quiz—Class 7 W-101
Action Project 3—Life Insurance Illustrations (Due today) W-83
Sales Planning Project 5⎯Optional Provisions (Due today) W-89
Breakout—Class 7 W-105
Most Valuable Concepts W-113

Life Insurance Taxation, Marketing, Ethics and
8 Service
Readings:
Learning Objectives 8-1
____ The Income, Estate, and Gift Taxation of Life
Date Insurance 8-2
Life and Viatical Settlements 8-10
Life Insurance Marketing Ideas 8-15
Ethics for Life Insurance Advisors 8-25
Service the Plan 8-38
Chapter Eight Review 8-50
Quiz—Class 8 (Due today) W-107
Breakout—Class 8 W-111
Most Valuable Concepts W-113

____ Review Session for the Final Examination
Date

____ Final Examination
Date This is a closed-book exam. You cannot refer to your textbook
or any other materials during the exam. The exam will consist
of 50 multiple-choice questions.
W-6 Essentials of Life Insurance Products
Special Notes to Advisors
Workbook Materials Disclaimer
While every precaution has been taken in the preparation of this material to insure that it is both
accurate and up-to-date, it is still possible that some errors eluded detection. The authors and The
American College assume no liability for damages resulting from the use of the information contained
in this Workbook. The American College is not engaged in rendering legal, accounting, or other
professional advice. If legal or other expert advice is required, the services of an appropriate
professional should be sought.
Caution Regarding Use of Illustrations
The illustrations, sales ideas and approaches in this workbook are not to be used with the public
unless you have obtained approval from your company. Your company’s general support of The
American College’s programs for training and educational purposes does not constitute blanket
approval of the sales ideas and approaches presented in this workbook, unless so communicated in
writing by your company.
Use of the Term Financial Advisor or Advisor
Use of the term “Financial Advisor” as it appears in this workbook is intended as the generic reference to
professional members of our reading audience. It is used interchangeably with the term “Advisor” so as to
avoid unnecessary redundancy. Financial Advisor takes the place of the following terms:

Account Executive Life Insurance Agent
Agent Life Underwriter
Associate Planner
Brokers (stock or insurance) Practitioner
Financial Consultant Producer
Financial Planner Property & Casualty Agent
Financial Planning Professional Registered Investment Advisor
Financial Services Professional Registered Representative
Health Underwriter Senior Advisor
Insurance Professional

Answers to Questions in the Course
The answers to all essay and mutliple choice questions in this course are based on the text materials as
written.

Course Comments
The American College welcomes your comments about this course, particularly suggestions for its
improvement. The blue comment cards at the end of this course guide can be used for this purpose.

Workbook W-7

Course Overview and Expectations
Welcome to LUTC 257, Essentials of Life Insurance Products. This introductory section begins with
an overview of the course objectives. Then it discusses the components of the course, reviewing the
various assignments and activities that will help you apply what you learn. Finally it closes with a
discussion of what is expected from you.
Overall Course Objectives
Over the years The American College’s LUTC program has become synonymous with quality
training, enabling thousands of students to gain the necessary skills associated with being a competent
and ethical financial advisor (see previous page for an explanation of the meaning of the term
“financial advisor” or “advisor” as used throughout the materials of this course). This tradition
lives on in the Essentials of Life Insurance Products course. By the end of this course you will be able
to
• recognize and describe the basic and foundational principles of life insurance
• describe the major economic needs for life insurance for individuals, families and businesses
• explain the major characteristics and differences between types of life insurance policies
• explain the methods of comparing costs of life insurance policies
• describe the advantages and shortcomings of life insurance policy illustrations
• explain the policy provisions of life insurance policies
• describe the income, estate, and gift taxation of life insurance
• review ethical issues relevent to the advisor, client and insurer in the selling/planning process
• apply the selling/planning process to assist clients in achieving life insurance protection

The achievement of these objectives depends on the time and energy you invest in completing the
assignments associated with the various components of this course. The next section provides an
overview of the course components and the assignments related to them.
Course Components and Assignments
The American College’s LUTC/FA courses offer practical on-the-job training. Therefore, they require
students to take action and participate fully. Except for the final examination, each component of the
course is designed to facilitate action and participation, which will translate into more new clients and
better client relationships. The course components include:

• the classroom
• the text
• the workbook
• the final examination
Workbook W-9
The Classroom
The classroom is where the idea-sharing that gives LUTC courses their unique value takes place. Of
course, the value you receive in the classroom depends on your preparation and participation.
Students in an LUTC classroom represent various levels of knowledge and experience in the
financial services industry. Sharing with one another will provide everyone an opportunity to grow in
proficiency, professionalism, and productivity. In fact, the classroom’s “magic” only happens if
everyone is prepared and participates.
The Text
The discussions in the classroom will focus on applying the concepts discussed in the text. Thus, you
are expected to have read the text assignment before class. In addition to the regular textbook
information, chapters will also contain a chapter review and many will have a case history to read.

Chapter Review—In order to reinforce what you learn, each chapter in the text includes a chapter
review that consists of short answer, multiple choice, and matching questions. You are not required to
complete these before class. Many students use these questions to review for the final examination.
Answers are provided in the back of the text.

Case History—A chapter may contain a case history, which can be an actual sales situation or a
description of how a successful advisor markets, prospects, interviews, services, and so forth. It is
designed to stimulate thinking and discussion about sales ideas and activities. As you read a case
history, think about how you would handle a similar situation. Does it suggest a method you want to
adopt or avoid? Why? The case history will be discussed in class per your moderator’s discretion.
The Workbook
This Workbook contains an assignment schedule and all of the mandatory assignments that must be
completed for each class. The assignments are primarily breakouts, case studies, quizzes, action
projects and sales planning projects. All page numbers in the Workbook start with a W. For example,
this is page W-10.

Assignment Schedule—The Assignment Schedule lists your assignments for the entire course and is
located in the front of the Workbook. There is a space on the assignment schedule to write the date for
each class session, which your moderator will announce at the first class. By following the schedule,
you can readily determine the material that will be covered in every class and the work that is expected
of you.
Except for the assigned readings in the text and assignments your moderator gives you, all other
activities can be found in the Workbook. Let’s take a look at them.

Breakouts—For each class you will find a breakout, a set of questions and/or exercises designed to
focus your attention on topics your moderator will most likely cover in class. The breakouts will ask
you to apply what you learn. For example, many of them will ask you to explain a concept as you
would to a client or prospect. You may then be asked to participate in a role-playing exercise based on
your answer to the breakout. You will be expected to have breakouts completed for each class.

Case Studies—Some classes may use case studies. A case study provides a specific set of facts and
circumstances about a sales situation. You are then asked to come up with specific recommendations
W-10 Essentials of Life Insurance Products