Life Insurance Basics

Industrial life insurance is written on an individual basis in small amounts, usually with a face amount of less than

$1,000, with premium payable weekly or monthly. As a general rule, these policies are written nonmedically.

if HIV testing is required an applicant has ___ days to decide whether or not to sign the consent form

10

who would provide an underwriter with information concerning an applicant's health history

The medical information bureau

a buy-sell agreement is for

business uses of life insurance

It is illegal for insurers to state that their policies are guaranteed

by the existence of a Guaranty Association.

Cost comparison methods are used to

compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced.

Key person life insurance benefits are

usually received tax free

what is the primary source of information used for insurance underwriting

application

Stranger-originated life insurance (STOLI) policies

are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

In life insurance, insurable interest must exist

at the time of application.

part 1 includes

general questions: Gener, occupation, marital status

It is an unfair trade practice to make any statement that an insurer's policies are

guaranteed by the existence of the Insurance Guaranty Association. Though it is illegal to advertise, the statement is still true and would not be considered a misrepresentation.

suitability

insurance producers must ensure that contracts they recommend are in the best interest of the insured

Because insurers receive premiums before they must pay out benefits, they can

invest the premium money and use the interest to lower premium amounts charged to insureds.

The Attending Physician Statement

is used to obtain medical DETAILS about a specific condition which has shown up in the application; the insurance company orders the information directly from the physician, using a signed authorization which was part of the application.

Buyer's guide explains

life insurance in general terms in order to assist the applicant in the decision-making process

Viator

means the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract.

Inspection reports cover

moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.

Key person life insurance premiums are

not tax deductible as a business expense

a prospective insured receives a conditional receipt but dies before the policy is issued the insurer will

pay the policy proceeds only if it would have been issued

producers reports covers

personal activities and character of an applicant observed by the agents

Substandard risk classification is also referred to as _______ since these policies could be issued with the premium rated-up, resulting in a higher premium.

rated

personal uses of life insurance include

survivor protection state creation and conservation cash accumulation and liquidity

If the initial premium is not paid with the application,

the agent will be required to collect the premium at the time of policy delivery. In this case, the applicant will most likely need to fill out a Statement of Good Health.

Any changes to information on an application must be initialed by

the applicant.

The mode refers to

the frequency the policyowner pays the premium: monthly, quarterly, semiannually, or annually. The amount of premium will change accordingly.

Variable life policies vary in value, as the name suggests, because the value is based on

the stocks that support the policy. If a policyholder wants a more stable, reliable value, he/she should invest in a fixed policy.

if the full premium was submitted with the application and the policy was issued as requested the policy effective date would be

thr date of application

Liquidity in life insurance refers

to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.

An agent should not ____________________________________________ It could prevent an insurer from contesting the application, should it be necessary.

use white-out, erase or obliterate any answers given to a question on an application.

are insurance company underwriters allowed to discriminate

yes but not unfairly