Health and Life Insurance - Life insurance Basic

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

Which of the following is a risk classification used by underwriters for life insurance?

Standard

What term describes the fee a person pays an insurance company to receive coverage?

Premium

Who must be a member of insurance guaranty associations?

All insurers authorized to write insurance within a state

What type of life insurance offers an applicant a cash value element?

Permanent insurance (usually, whole life)

What document describes the specific information about a policy?

Policy summary

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application.

Who must have insurable interest in the insured?

The policyowner

Which of the following is an owner of a life insurance policy who enters into a viatical settlement contract?

viator

Once a viatical contract has been established, how long does the viator have to rescind the contract?

15 calendar days

Once a mail-order solicitation has been filed, how long may it be used?

2 Years

If a viatical settlement provider transfers ownership of an insurance policy, how long does the insurer have to inform the insured of the change?

20 days

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

An Inspection Report

When must the policy summary for a life insurance policy be delivered to the policyowner?

At the time of policy delivery

What does liquidity mean in a life insurance policy?

Availability of cash value

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Executive bonus

How does the premium mode affect the total premium paid for insurance for the year?

Higher frequency of premium payments will result in higher overall premium

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

Human life value approach (HLVA)

The Medical Information Bureau (MIB) was created to protect

Insurance companies from adverse selection by high risk persons.

What are the three main instances when insurable interest exists in life insurance?

Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

It will decrease.

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

What type of insurance creates an immediate estate?

Life insurance

What is included in Part 2 of a life insurance application?

Medical information about the prospective insured

All other factors being equal, which premium payment mode will require an overall higher premium: monthly or annual?

Monthly

What are the three factors that determine the premium for a particular life insurance policy?

Mortality, interest and expense

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity

Which of the following would provide an underwriter with information concerning an applicant's health history?

The Medical Information Bureau

What is the purpose of the agent's report during the application process?

The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process.

A business is the owner and beneficiary of a key-person life policy. When the business collects the policy benefit, how is it taxed?

The benefit is received tax free.

Who is the beneficiary on a key-person life insurance policy?

The employer

: If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?

The existence of insurable interest between the applicant and the insured

Who is responsible for the contents of insurance advertisements?

The insurance company

When planning for survivor protection in life insurance, what needs to be considered?

The insured's current assets, liabilities and survivor's needs

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company

What is insurance underwriting?

The process of risk selection and classification

What is the purpose of key person insurance?

To minimize the risk of financial loss caused by the death of a key employee

What is the purpose of insurance guaranty associations?

To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers

An insured receives 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 does the insured have?

Variable

Who negotiates viatical settlement contracts on behalf of a viator?

Viatical settlement broker

Who effectuates viatical settlement contracts?

Viatical settlement providers

These violations may result in

suspended or revoked licenses, refusal to renew licenses, and fines of up to $500 for each act.

What is the term that describes the frequency and the amount of the premium payment?

Premium mode

All of the following are characteristics of group life insurance EXCEPT

Premiums are determined by the age, sex and occupation of each individual certificate holder.

What are illustrations in a life insurance policy?

Presentations of nonguaranteed elements of the policy

Another name for a substandard risk classification is

Rated

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?

Either on the date of the application or the date of the medical exam (whichever occurs last)

Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called?

Estate conservation

What type of report provides information about the applicant's hobbies, habits and financial status?

Investigative consumer report

Attempting to determine how much insurance a family would require based upon their financial objectives is known as

Needs Approach

What is the main responsibility of a company's underwriting unit?

Risk selection

When must insurable interest exist in a life insurance policy?

At the time of application

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice.

What must happen when an individual policy or annuity has been personally delivered to the policyowner?

The policyowner must sign a delivery receipt.

In calculating the amount of life insurance needed, what is the needs approach based on?

The predicted needs of a family after the premature death of the insured