Life Insurance: Basics Quiz
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date prior to the policy issue
Which of the following is usually true of a participating life insurance policy?
It pays dividends to policyowners
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
The following would be the best option that would help the surviving spouse of the insured to put her child to daycare after the insured's death?
Life Insurance proceeds
In a life settlement contract, whom does the life settlement broker represent?
The owner
Which is generally true, regarding insured to have been classified as preferred risks?
They are premiums are lower
What is the purpose of the buyers guide?
To allow the consumer to compare the cost of different policies
Which of the following is the best reason to purchase life insurance rather than annuities?
To create an estate
And most the insurance guaranty association will pay for net cash surrender value is?
$300,000
All of the following are factors that an underwriter could use to selecting classified risk EXCEPT
National origin
Which of the following would not fall into the category of cost associated with death?
The expense of a vacation for surviving family members
An agent wants to include an illustration written by their insurance company. Which of the following best describes the conditions under which they may use the illustration?
The illustration must stay exactly as it is
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?
A debtor has insurable interest in the life of a lender
Which of the following applicants could then sure charge a higher rate of premium and not violate regulations regarding unfair discrimination?
An applicant who is a smoker
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 find this agreement?
Any form of Life Insurance
Partners in a business and turn to a Buy-sell agreement to purchase life insurance, which states that did one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. Type of insurance policy may be used to fund this agreement?
Any form of life insurance
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 find this agreement?
Any form of life insurance
When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information?
Application
All of the following organs and responsibilities of producers of the time of application EXCEPT
Change any incorrect statement on the application by personally and initialing next to the corrected statement
If an applicant for a life insurance policy is found to be. A substandard risk, the insurance company is most likely to?
Charge a higher premium
Which of the following is NOT an example of valid insurable interest?
Debtor in the life of he creditors
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Decreases
A producer agent must do all of the following when delivering a new policy to the insured EXCEPT
Disclose commissions earned from the sale policy
All of the following information about the applicant is identified in the general information section of a life insurance application, EXCEPT
Education
Which part of an insurance application would contain information regarding the cause of death of applicants deceased relatives?
Medical information
Which of the following premium modes would result in the highest annual cost for an insurance policy?
Monthly
All of the following are factors that an underwriter could use the selecting classified risk EXCEPT
National origin
All of the following are factors that an underwriter could use to select and classify risk EXCEPT
National origin
Which of the following documents must be provided to the policy owner or applicant during policy replacement?
Notice regarding replacement
During replacement of life insurance, replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
of services from that key person. Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT:
Other insurance coverages
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 issued the policy
A prospective insured receives a conditional receipt but dies before the policy was issued. The insurer will?
Pay the policy proceeds only if it would have issued the policy
An Applicant wants to buy a policy that has a cash value element. What type should she buy?
Permanent
An applicant wants to buy a policy that has a cash value element. Which type should she buy?
Permanent
If someone wants to buy life insurance policy, that will provide them, lifetime protection against premature death, what type of life insurance policy should that person buy?
Permanent
What describes specific information about a policy?
Policy Summary
Which of the following individuals must have insurable interest in the insured?
Policyowner
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
Which of the following statement 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
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 propulsion
Producer is helping a married couple determine the financial needs of their children in the vent, one or both of them die prematurely. This is a personal use of Life Insurance, known as:
Survivor protection
Which of the following is not an example of a valid insurable interest?
That are in the wife of the creditor
Which of the following would provide an underwriter with information concerning an applicants health history?
The Medical Information Bureau
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
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about
Whether an insurable interest exists between the two
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly
Which of the following is the basic source of information used by the company and the risk selection process?
Application
Which of the following is the basic source of information used by the company in the risk selection process?
Application
The full premium was submitted with the application for Life Insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
Which of the following is NOT true of life settlements?
As of the application date
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
Buy-Sell Agreement
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount
Buy-sell agreement
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 terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy
Which of the following would be the best option that would help the surviving spouse of the insured to put her child to daycare after the insurance death?
Life insurance proceeds
Which of the following documents delivered to the policy? Owner includes information about premium amount, cash, values, surrender, values, and death benefits for specific policy years?
Policy summary
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life vale?
Predicted needs of the family after the insured's death
Based on human life value approach, which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death
What does "liquidity" for two in a life insurance policy?
Cash value can be borrow to Anytime
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time
An Agent wants to include an illustration written by their insurance company. Which of the following best describes conditions, under which they may use the illustration?
Illustration must stay exactly as it is
Sharon received a report regarding a potential claim that includes the insurance financial status, hobbies, and habits. What type of report is that?
Inspection report
Underwriter may obtain information on an applicants hobbies, financial status, and habits by ordering a(n):
Inspection report
The Medical information bureau (MIB) was created to protect
Insurance companies from adverse selection by high-risk person
Which of the following statements regarding HIV testing for life insurance purposes is NOT true?
Insurers are barred from requesting HIV testing
Which of the following will be included in a policy summary?
Premium amounts in surrender values
Which of the following would least likely be considered a legitimate need that would be paid by insurance needs?
Taking family on vacation
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
The Producer must provide the applicant with a notice regarding replacement
Which of the following statements is true concerning the creditors of the deceased insured?
The creditors have rights to the proceeds if they can show evidence of a valid assignment
Who is the owner and who is the beneficiary on a key Person Life Insurance policy?
The employer is the owner and beneficiary
Who is the owner and who is the beneficiary on a key person life insurance policy?
The employer is the owner and beneficiary
Which of the following would NOT fall into the category of costs associated with death?
The expense of a vacation for surviving family members
All of the following are true of key person insurance EXCEPT
The plan is funded by permanent insurance only
What must happen when an individual policy or annuity has been personally deliver to the policy owner?
The policy owner must sign a delivery receipt
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
What is the purpose of the Insurance Guaranty Association?
To protect policyowners against insurer insolvency
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
Producers, helping a married couple determine the financial needs of their children in the vent, one or both die prematurely. This is a personal use of Life Insurance, known as:
Survivor protection
Which of the following is an example of liquidity in a life insurance contract?
The cash value available to the policy owner
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the coverage become effective?
The seller must be terminally ill
An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 month to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?
Viatical settlement
And insured under a life insurance policy has been diagnosed with a terminal illness in six months to live. The insured knows that his financial state will worsen even more with upcoming medical expenses. What option could the insured utilize?
Viatical settlement
What is the name of the insured who enters into a viatical settlement?
Viator
