Life Insurance Chapter 2: pt. 2

Which of the following is not an example of insurable interest?

Debtor in creditor

Credit Life insurance

Insurer the life of the debtor

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance polices that will be replaced

What kind of policy issues certificates of Insurance to insureds?

Group Insurance

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

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. IF the customer replies yes, which of the following best describes the agent's next step?

The agent must provide a replacement notice to the applicant

All of the following are true of key person insurance except:

The plan is funded by permanent insurance only

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

Which of the following is not required for a producer to tell a prospect?

What requirements the producer needed to meet to obtain the insurance license

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

an unfair trade practice

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

Inspection report

Who makes up the Medical Information Bureau?

Insurers

which of the following best describes the MIB

It is a non profit organization that maintains underwriting information on applicants fro life and health insurance

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step:

The agent must provide a replacement notice to the applicant

An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?

The cost of coverage is a deductible expense by the employer

when replacing a policy, how long must an insurer maintain the documents related to the replacement?

3 years

At times, it is possible for a life insurance agent to affect a savings of premium rates by backdating an application for life insurance. What is the max amount of time that an application may be backdated?

6 months

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

When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by

A paramedic or examining physician at the insurer's expense

Partners in business may financially buy interest of the deceased partner with

Any form of life insurance

All of the following are personal uses of life insurance EXCEPT

Buy sell agreement

All of the following are duties and responsibilities of producers at the time of application except:

Change incorrect statement on the application by personally initialing next to the corrected statement

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

What is the purpose of a conditional receipt

It is intended to provide coverage on a date prior to the policy issue

In modified life policies, what happens to the premium?

It is level at the beginning and increases after the first few years

Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?

Premiums are not tax deductible as a business expense

The term "illustration" in a life insurance policy refers to

A presentation of non guaranteed elements of a policy

which of the following entities protects policy owners, insured, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment

Insurance Guaranty Association

Upon policy delivery, the producer may be required to obtain any of the following except:

Signed waiver of premium

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. IF the policy is issued, what would be the policy's effective date?

The date of the medical exam

For how many years is an insurer required to maintain a complete file of it's advertisements

4 yrs.

When is the earliest a policy may go into effect?

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

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

When must insurable interest exist in a life insurance policy?

At the time of application

In terms of social security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits

Blackout Period

What is the time period called during which the surviving spouse of the insured does not receive social security income benefits

Blackout period

All of the following are personal uses of life insurance except:

Buy-sell agreement

How are state Insurance Guaranty Associations funded?

By their members - authorised insurers

all of the following are factors that an underwriter could use to select and classify risk except:

National origin

An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information?

Present the insured with a disclosure authorisation notice

An employer quits his job on May 15 and doesn't convert his group life insurance policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary

An applicant who receives a preferred risk classification qualifies for

Lower premiums than a person who receive a standard risk