Insurance - Chapter. 3

Betty and Jack have a partnership. If their partnership is worth $800,000 how much life insurance is issued on each partner if a cross-purchase plan is used?

$400,000

A person with this risk classification will have a discounted premium from the rates provided in the C.S.O. tables.

Preferred

Martin pays his policy premiums on a monthly basis. Which of the following terms best describes the frequency that Martin pays his premiums?

Premium payment mode

Which business continuation plan permits a deceased shareholder's heirs to maintain some ownership while the corporation redeems a portion of the deceased shareholder's shares?

Section 303 plan

What business continuation agreement would you recommend to a corporation with 3 shareholders so that when a shareholder dies, all other shareholders agree to purchase a portion of the deceased shareholder's stock at an agreed price?

Stock purchase plan

Employer-paid premiums used to fund group life insurance for the benefit of employees are:

Tax-deductible

All of the following are true regarding viatical settlements, EXCEPT:

Viatical settlements are a type of life insurance contract.

A life insurance policy summary includes all of the following

a. The insurance agent's name b. Policy premium amounts c. Policy loan interest rates

For replacement transactions, an insurance producer's duties include all of the following, EXCEPT:

Notify existing insurers of policies to be replaced

Life insurance policy illustrations must contain all of the following, EXCEPT:

Only the guaranteed policy elements

Which of the following best describes the tool underwriters use to determine the rate at which a group of people die?

Mortality table

The ____________ approach calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities.

Needs

Each member insured under a group life insurance policy receives a(n):

Certificate of insurance

Which of the following business continuation agreements is most appropriate for Teri and Annette's business partnership?

Cross-purchase plan

All of the following are buy-sell agreements.

Cross-purchase, stock redemption plan, entity plan

A furniture company is owned by five partners. What business continuation plan would you suggest to the company?

Entity plan

Mary's Cosmetics purchases a life insurance policy on Samantha, the leading makeup salesperson in the nation. Which business continuation plan did Mary's Cosmetics buy?

Executive bonus plan

The time period during which children are young and financially dependent upon their parents is termed the:

Family dependency period

All of the following are considered minimum information that must be on a life insurance illustration

Form number Dividend options, Nonguaranteed elements, if any

The ___________ approach calculates the amount of money a person is expected to earn over their lifetime to determine the face amount of life insurance needed, thereby placing a dollar value on the life of an individual.

Human life value

The nonguaranteed elements of an insurance policy are:

Illustrations

All of the following are true regarding claims for life insurance policies, EXCEPT:

In order for death benefits to be paid, the insurer must receive notice of the insured's death, but does not need the death certificate.

Which of the following does not constitute policy replacement?

Life insurance coverage in which a loan is not repaid to the insure

Life insurance policies with cash value provide the insured with immediate availability of funds, referred to as:

Liquidity

Another term for insurers' expense is:

Loading

To determine the premium rate for health insurance policies, all of the following are used, EXCEPT:

Mortality

Net single premium is:

Mortality + Loading

Angela took out a $2,000 policy loan from her whole life insurance policy. The policy face amount is $200,000. If Angela does not repay the loan, how will the death benefit be affected?

The death benefit will be decreased by $2,000 plus interest.

Who is responsible for the dissemination and content of insurance advertisements?

The insurer

All of the following are true regarding purchase of personal life insurance for charity, EXCEPT:

The person purchasing life insurance for charity must have insurable interest in the lives of the charity's members.

Ben applies for a life insurance policy on himself. How much insurable interest does Ben have in his own life?

Unlimited

When must insurable interest be shown for a life insurance policy?

Upon policy application

The third party that purchases a life insurance policy death benefit from a terminally ill insured is termed:

Viatical settlement provider

Level premium life insurance policies usually have ______ premiums in order to account for the greater risk of death with advancing age.

higher

In life insurance the risk of death increases with age, so premiums must be ______ in ______ years to account for this risk.

lower; later

Which of the following is not used to calculate the premium for life insurance contracts?

morbidity