Life Insurance

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT

A. Disclose commissions earned from the sale of the policy.

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?

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

When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would

A. Lower the insured's premium.

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT

A. Other insurance coverages.

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

A. Substandard risk

For what reason may a life insurance producer backdate a life insurance policy?

A. To avoid an increase in premium rate for the insured

When must the Buyer's Guide be delivered to the proposed insured?

B. At the time of application

All of the following information about a customer must be used in determining annuity suitability EXCEPT

B. Beneficiary's age.

All of the following are business uses of life insurance EXCEPT

B. Funding against company's general financial loss.

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

B. Insurers are barred from requesting HIV testing.

All of the following are characteristics of group life insurance EXCEPT

B. Premiums are determined by the age, sex and occupation of each individual certificate holder.

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

B. To create an estate

What is the purpose of key person insurance? A. To maintain and account that insures the owner of a company remains solvent B. To lessen the risk of financial loss because of the death of a key employee C. To provide health insurance to the families of key employees D. To insure retirement benefits are available to all key employees

B. To lessen the risk of financial loss because of the death of a key employee

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?

C. A debtor has an insurable interest in the life of a lender.

Which is the primary source of information used for insurance underwriting?

C. Application

When must insurable interest exist in a life insurance policy?

C. At the time of application

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

C. Charge a higher premium.

If an agent fails to obtain an applicant's signature on the application, the agent must

C. Return the application to the applicant for a signature.

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

C. Variable

Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination?

D. An applicant who is a smoker

When the partners of a business develop an arrangement whereby should one of them die or become permanently disabled, the other partners would purchase the interest of the deceased or disabled partner at a predetermined price, this is called a/an

D. Business continuation plan.

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

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

The mode of premium payment

D. Is defined as the frequency and the amount of the premium payment.

Which of the following is usually true of a participating life insurance policy?

D. It pays dividends to policyowners.

Attempting to determine how much insurance a family would require based upon their financial objectives is known as

D. Needs approach.

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?

D. Permanent

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

D. Premiums are not tax deductible as a business expense.

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?

D. The date of medical exam