Scheduled California Life Exam Tutoring & Prep Classes

Scheduled Tutoring Sessions ~ San Diego:
Open Office Hours ~ Show up during these times.
6160 Mission Gorge Rd., ste 200, San Diego  92120

TBD

* other times / locations by appointment (e-mail me)
Tutoring can be held at your office during / after meetings.

Bring study materials and the workbook questions you're having trouble with the most.  These sessions are more specialized to the students' needs, while the prep classes are meant for large group information "reinforcement."  Everyone learns in different ways, but repetition is key.  Best chance to ask for specific help. 

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Prep Classes
SAN DIEGO:  Instructor Kevin Tuckey

6160 Mission Gorge Rd, #200         (Click HERE for a map)
San Diego, CA  92120
TBD

CARLSBAD:  Instructor Kevin Tuckey
3282 Grey Hawk Ct.                  (Map)
ste B
Carlsbad, CA  92010 
TBD

Dividends vs. Dividends

Helping students study for the exam, I've noticed a big area that leads to confusion, and maybe a few wrong answers, is that of the differences between Stock Insurers, and Mutual Insurance Companies.

The problem is so many similar phrases are used for each topic, it's easy to "cross-your-wires".  Here's a lot of what you need to know about this topic.


Stock Insurers                    Mutual Insurers
owned by ...
Shareholders                                  Policyholders
they want Profit                              they want Refunds of any over-payment
                                                           (as an owner / client, they wouldn't over charge themselves)
These profits are called                These refunds are called 
Stock DIVIDENDS                           Policy DIVIDENDS
As Profit they are                            As a Refund, they are
TAXABLE                                         NOT TAXABLE


The Clients...
Have NO VOTING RIGHTS,          Have VOTING RIGHTS,
NO OWNERSHIP,                           An OWNERSHIP STAKE, 
NO RIGHT TO PROFITS                A RIGHT TO SURPLUS FUNDS

So they are called...                        So they are called... 
NON PARTICIPATING                    PARTICIPATING POLICIES (par)
POLICIES (non-par)


                                      < < <  --------  When a Mutual Company switches to
                                                             become a Stock Insurer, it's called ...
                                                              DEMUTUALIZATION

                                                              These Dividends are...
                                                               NOT TAXABLE &
                                                               NOT GUARANTEED

                                                              The 5 Dividend Options:
                                                                     O = one year term (more ins.)
                                                                     C = cash
                                                                     R = reduce next / current premium
                                                                     A = accumulate with / at interest
                                                                     P = paid-up additions (more ins.)
                                                                                  "Oh CRAP"

* Rarely, but it's possible, you might see Policy Dividends referred to
as Divisible Surplus, or Earnings Surplus.

The Evolution of Cash Value

Do you know the major characteristics of the main cash value policies?

As the policies were developed, they were slight variations of the previous versions.  Whole life could maybe be thought of as the original "Grand-daddy."  Everything about it is fixed, level, and predictable.  It was designed "pre-computers".

As time went on, other option became available with varying levels of flexibility (ie: universal) and fluctuation in value (ie: invested in the stock market).  The clients wanted more choice and potential.  

Of course the more a policy can fluctuate, the more aggressive it is (red).  Results are less predictable.  The more stable it is, the more conservative it is (green).

Of course in the end, if the client dies while the policy is in force, they all pay a death benefit.

Which one's best?  That always open to debate, and client preferences and tolerances.

(Always consult with a licensed, knowledgeable insurance agent before making a buying decision.  These policies have more factors than is discussed here.  This site is merely to help future agents learn the basics to pass the exam.)