Chapter 6

In which market are Certificates of Insurance issued to insured individuals? A Franchise B Individual C Industrial D Group

Group

A partnership involving four equal partners is valued at $1,800,000. Under a Buy-Sell Agreement (Cross Purchase Plan), the amount of the policy on the life of each partner would be: A $1,800,000 B $450,000 C $900,000 D $150,000

$150,000 Each partner's ownership share equals $450,000, thus each partner would own a $150,000 policy on the life of each of the other three partners under a Cross Purchase Plan (3 x $150,000 = $450,000). There would be a total of 12 (4 x 3) policies (12 x $150,000 each = $1,800,000).

As specified by the California Insurance Code, the validity of a group policy cannot be contested, except for nonpayment of premiums, after it has been in force for: A 2 years B 9 months C 1 year D 18 months

2 years

The Insurance Code specifies larger groups that are eligible for group life insurance, such as elementary and secondary school teachers, employees of the state colleges and universities, and members of the National Guard as long as they have at least: A 25 members B 20 members C 10 members D 15 members

25 members

There is a conversion period of how many days in which the employee may, upon termination of eligibility and without evidence of insurability, convert his/her group life insurance benefit to an individual permanent policy? A 60 B 31 C 45 D 90

31

A partnership has 3 partners who each have an equal ownership interest in their $3,000,000 business. How many policies would have to be purchased under a traditional cross purchase buy-sell agreement plan? A 9 B 3 C 1 D 6

6

Which of the following would not be eligible for coverage under an employer group life insurance plan? A An employee B An employee's best friend C An employee's spouse D An employee's child

An employee's best friend

Which of the following would not be eligible for coverage under an employer group life insurance plan? A An employee's spouse B An employee C An employee's best friend D An employee's child

An employee's best friend

Group Life Insurance is usually written as: A Contributory Term B Annual Renewable Term C Decreasing Term D Increasing Term

Annual Renewable Term

The type of life insurance used to provide funds for a Buy-Sell Agreement is: A Term Life B Whole Life C Any type of life insurance D Variable Life

Any type of life insurance

As specified by the California Insurance Code, an employer group policy may exclude or limit coverage for losses arising from conditions relating to all of the following, except: A Change in job classification B Aviation exposures C War D Military service

Change in job classification

Who is generally named as the beneficiary when a credit life insurance policy is issued? A Spouse of insured B Estate of the insured C Creditor D Debtor

Creditor

Credit Life insurance is usually what type? A Decreasing Term B Variable Term C Level Term D Increasing Term

Decreasing Term

The __________ allows an insurer to pay death benefits anyone it deems to be entitled in the absence of a designated beneficiary. A Creditor Collection Clause B Next of Kin Clause C Policy's Settlement Option D Facility of Payment Clause

Facility of Payment Clause

In those instances in which the death of a valued employee could cause financial hardship for a company, the company might acquire additional funds through which type of coverage? A Employer-Employee Cross Purchase B Key Person C Business Reimbursement D Preferred Insured

Key Person

To help protect against experiencing immediate claims, group plans have a(n) _______ period set up by the group sponsor. A Probationary B Elimination C Conversion D Open enrollment

Probationary

A mandatory participation rate for noncontributory group plans is designed to: A Allow the employer to obtain the greatest premium discount B Achieve economies of scale C Reduce adverse selection D Maximize the premium an insurer collects

Reduce adverse selection

The premium for optional dependent group insurance can be payable by: A Both the employee and employer must contribute B The employee only C The employer only D The employer, the employee, or both

The employer, the employee, or both

The Social Security Death Benefit is payable to the ____________. A The surviving spouse B The next of kin C The named beneficiary D The estate of the insured

The surviving spouse

To be eligible for a group insurance plan, the group must be: A A natural group B Formed for procuring insurance C Approved by the Commissioner of Insurance D Formed for reducing the cost of insurance

A natural group

Which of the following best describes Third-Party Ownership? A A key employee buying a life insurance policy on him/herself B A policy owned by the insured C A policy owned by one person insuring the life of another person D A business partner buying a life insurance policy on him/herself

A policy owned by one person insuring the life of another person

In the event a terminated or ineligible employee dies during the conversion period from a group life plan, whether they were going to elect individual coverage or not, a death claim will be paid by the group policy, less the premium due for the benefit, which means that the conversion period is really: A A grace period B A blanket benefit C An incontestable period D An extension of benefitsIn the event a terminated or ineligible employee dies during the conversion period from a group life plan, whether they were going to elect individual coverage or not, a death claim will be paid by the group policy, less the premium due for the benefit, which means that the conversion period is really: A A grace period B A blanket benefit C An incontestable period D An extension of benefits

A grace period

Regarding Social Security survivor benefits, when the youngest child reaches age 16, the widow's/widower's _________ period begins and continues until the surviving (non-remarried) spouse reaches age 60. A Blackout B Elimination C Waiting D Probationary

Blackout