Life & Health Final Exam Spring 2020

An insurance company formed under the laws of any country other than the United States would be considered

An alien insurance company

What kind of policy will protect an insurance agent against liability arising out of acts committed in her professional capacity? Errors and Omissions Indemnity Contractual Liability General Liability

Errors and Omissions

Which of the following statements about variable universal life insurance is NOT correct? It allows the insured to make withdrawals or to borrow from the policy during the insured's lifetime. It pays a death benefit to a named beneficiary and offers the insured tax-deferred cash value investment options. It offers flexibility in premium payments and face amounts dependent on investment performance. It guarantees a minimum cash value in the investment account.

It guarantees a minimum cash value in the investment account.

Which of the following statements regarding limited-pay life insurance is NOT correct? Cash value grows more quickly in limited-pay life policies than it does in continuous premium whole life policies. Limited-pay policies mature more quickly than do continuous premium whole life policies. Limited-pay policy death benefits remain level for the duration of the policy. Limited-pay policies endow when the insured is 100 years old (or 121 on newer policies).

Limited-pay policies mature more quickly than do continuous premium whole life policies.

The tendency for unhealthy people to seek life or health insurance at standard rates is an example of

adverse selection

Choua applied for a $100,000 whole life policy but did not pay the initial premium at the time of application. When the agent later delivers the policy, the agent must collect the premium and obtain which of the following statements from Choua? A statement of no material change of risk A statement of continued representations and warranties A statement of good health A statement of insurability

A statement of good health

According to the law of large numbers, what should happen as an insurer increases the number of units insured?

Actual results will more closely approach expected results.

Daniel owns an insurance agency in a small town and represents just 1 insurer. He wears apparel with the company logo, has the company name on his vehicle, and hands out merchandise with the company's name imprinted on it. What type of authority does this represent?

Apparent

Which of the following statements regarding life insurance applications is NOT correct? Completed applications contain personal information, which must be protected. Statements made by the applicant on the application are considered to be warranties. The application may not be altered without the change being initialed by the applicant. The application must be carefully reviewed by the agent for completeness.

Statements made by the applicant on the application are considered to be warranties.

What are life insurance transactions that are marketed to senior citizens and a possible method of fraud called? Stranger-owned life insurance (STOLI) or insured-owned life insurance (IOLI) Senior-owned life insurance (STOLI) or insured-owned life insurance (IOLI) Stranger-owned life insurance (STOLI) or investor-owned life insurance (IOLI) Stronger-owned life insurance (STOLI) or investor-owned life insurance (IOLI)

Stranger-owned life insurance (STOLI) or investor-owned life insurance (IOLI)

Which of the following $50,000 limited-pay life policies will have the highest premium for an applicant who is age 30? 25-pay life policy 20-pay life policy Life paid-up at age 65 30-pay life policy

20-pay life policy

Timber Insurance Company has suffered the following losses: $300, $250, $800, and $400. What is the average loss and standard deviation?

Average loss is $437.50; Standard Deviation is $249.58

An insured that meets the average health and life expectancy anticipated by the insurer for a person of that age and gender would be classified as An insurable risk An acceptable risk A preferred risk A standard risk

A standard risk

When a cross-purchase plan is funded by life insurance, Premiums must be paid by the eldest partner The business owns the policies The surviving partner's policy is automatically canceled Each partner owns a policy on the lives of each of the other partners

Each partner owns a policy on the lives of each of the other partners

Which of the following statements regarding life insurance is NOT correct? A creditor has an insurable interest in a debtor. Insurable interest must be maintained throughout the life of the contract. Spouses are automatically considered to have insurable interest in each other. All individuals are considered to have insurable interest in themselves.

Insurable interest must be maintained throughout the life of the contract.

Of the following, which best describes a need that decreasing term insurance is often used to meet? Providing long-term coverage at a reasonable premium Providing funds for final expenses at a reasonable premium Providing funds to pay off an outstanding loan at a high premium Providing funds to pay off an outstanding loan at a reasonable premium

Providing funds to pay off an outstanding loan at a reasonable premium

Which of the following statements pertaining to executive bonus plans is CORRECT? Death benefits are paid to the business. The business owns the life insurance policy. The employee has access to the policy's living benefits. Premiums are paid by the employee.

The employee has access to the policy's living benefits.

With regard to a breadwinner's death, the blackout period generally can be defined as The period during which the children are living at home and are dependent The period from the surviving spouse's retirement to his death The period that begins when the youngest child is 16 and ends when the surviving parent turns 60 A time when life insurance is rarely needed

The period that begins when the youngest child is 16 and ends when the surviving parent turns 60

All of the following are provisions of industrial life EXCEPT: The policy provides a 61-day grace period Suicide provisions do not apply to the policy Because the cash value is so low, policy loans are not permitted The application is not a part of the policy

The policy provides a 61-day grace period

Which of the following has the greatest impact in making one individual's life insurance premium different from that of another individual, assuming both own the same type of policy? The policy's interest factor The policy's mortality factor The policy's expense factor The policy's issue date

The policy's mortality factor