Life insurance basics

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time.

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

Decreases

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT

Education

Which of the following best describes gross annual premium?

Net premium plus expenses

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

Permanent

Based on Human Life Value approach, which of the following is NOT used to calculate an individuals life value?

Predicted needs of the family after the insureds death.

A viatical settlement is arranged between a viatical company and a/an

Terminally ill insured

Which is generally true regarding insureds who have been classified as preferred risks?

Their premiums are lower

Which of the following is the best reason to purchase life insurance rather than annuities?

To create an estate

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people.

Which of the following is an example of liquidity in a life insurance contract?

The cash value available to the policy owner.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection

Which of the following would not be included in a policy summary?

An evaluation of the applicants medical records.

The term illustration in a life insurance policy refers to

A presentation of non guaranteed elements of a policy

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent.

Which of the following terms is used to describe a person, other than a Viator, that enters into or effectuates a viatical settlement contract?

Viatical settlement provider

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?

It will likely be higher because the applicant is a substandard risk.

Who makes up the medical information bureau?

Insurers

An individual insurance agent may operate as a viatical settlement broker without obtaining a separate license if the viatical settlement broker activities are incidental to the agents business transactions, and if the agent has been licensed for life insurance for at least what period of time?

5 years

Partners in a business enter into a buy sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance may be used in a buy-sell agreement.

An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?

Fixed

Which of the following statements regarding HIV testing for life insurance purpose is NOT true?

Insureds are barred from requesting HIV testing.

Which of the following types of risks will result in the highest premium?

Substandard risk. This rating indicates that an individual represents an under-average insurance risk because of physical conditions, personal or family history of disease, occupation, habits or hobbies.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free