ch 2 life insurance basics

which of the following must have insurable interest in the insured ? a.producer b.policy owner c.beneficiary d.actuary

beneficiary

which of the following would describe a legal document which would dictate who can buy a deceased partners share of business and for what amount ? a.profit and loss agreement b.key person agreement c.split dollar agreement d.buy-sell agreement

buy-sell agreement

Who makes up the Medical Information Bureau a.hospitals b.former insured c.physicians and paramedics d.insurers

insurers

when an applicant purchased a life insurance policy the agent dated the application 4 months prior.When asked by the applicant the agent said he was allowed to backdate policies up to 6 months if it would ? a.lower the premium b.shorten the contestability period c.eliminate pre-existing conditions d. help him meet sales quota for that period

lower the premium

A prospective insurer receives a conditional receipt but dies before the policy is issued the insurer will a.pay the policy proceeds up to an established limit b.not pay the policy proceeds under any circumstances c.automatically pay the policy proceeds d.pay the policy proceeds only if it would have issued the policy

pay the policy proceeds only if it would have issued the policy

Which of the following is usually true of a participating life insurance policy a.pays dividends to policy owners b may be converted to a term life policy c.pays dividends to stock holders d.assesses premiums against stockholders

pays dividends to policy owners

A producer is helping a married a couple determine the financial needs of their children in the event one or both die prematurely this is a personal use of life insurance known as a. juvenile protection provision b.survivor protection c.life planning d.survivorship insurance

survivor protection

All of the following are true of key person insurance except a.the key employee is the insured b.the plan is funded by permanent insurance only c.there is no limitations on the number of key employee plans in force at any one time d.the employer is the owner,payer, and beneficiary of the policy

the plan is funded by permanent insurance only

All of the following are duties and responsibilities of the producer at the time of application except? a. change any incorrect statement on the application by personally initialing next to the corrected statement b.explain the nature and type of any receipt the producers is giving to the applicant c.probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information d.check to make sure there are no unanswered questions on the application

change any incorrect statement on the application by personally initialing next to the corrected statement

If an insurer changes his payment plan from monthly to annually what happens to the total premium ? a.stays the same b.doubles c.increases d.decreases

decreases

For what reason may a life insurance producer backdate a life insurance policy ? a.to shorten the period of contestibility b.to avoid an increase in premium rate for the insured c.to meet sales quota established by the insurer d.to make a policy effective during a period when the agents appointment was in force

to avoid an increase in premium rate for the insured

which of the following is the best reason to purchase life insurance rather than annuities ? a. to create regular income payments b.to liquidate a sum of money over a lifetime c.to create an estate d.to liquidate a sum of money over a period of years

to create an estate

Why should the producer personally deliver the policy when the first premium has already been paid ? a.to find out how the family has been doing since the initial presentation b.to make sure the policy is not lost or stolen c.to help the insured understand all aspects of the contract d.to ensure the producer gets paid commission

to help the insured understand all aspects of the contract

which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds a.vacation travel expenses b.travel expenses for family to come to funeral c.debt cancellation d.day cae

vacation travel expenses

An insurer recieves a monthly summary for his life insurance policy he notices that the cash value of the policy is significantly lower this month than it was last month what type of policy did the insured have a. variable b.term c.securities d.stock

variable