Life insurance
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
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 statements is NOT true concerning insurable interest as it applies to life insurance? a. a debtor has ii in life of lender b. business partners have ii in eachother c. married person to their spouse d. individual to self
a
The LEAST expensive first-year premium is found in which of the following policies?
annually renewable term
the type of policy that can be changed from one that does not accumulate cash value to the one that does in a
convertible term policy
which of the following is not an essential element of an insurance contract: legal purpose, counteroffer, consideration or agreement?
counteroffer
an insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. what kind of policy is it?
limited-pay life
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
An insurance contract requires that both the insured and insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
Conditional
When would a misrepresentation on an insurance application be considered fraud?
It is intentional and material
which of the following would provide an underwriter with information concerning an applicant's health history?
The medical information bureau
a producer 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 b. explain the policy provisions, riders, and exclusions c. collect any premium due d. explain the rating procedures if the policy is rated differently than applied for
a
a straight life policy has what type of premium?
a level annual premium for the life of the insured
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT a. past income b. medical history c. present physical condition d. present occupation
applicants past income
What is the primary source of information used for insurance underwriting?
application
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
conditional
an insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
conditional
What characteristic makes whole life permanent protection?
coverage until death or age 100
if the owner of a whole life policy dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefits will be paid to the beneficiary? a-a death benefit equal to the cash value of the policy b-50% of the death benefit c-face amount minus the premiums that would have been collected until the insured reached the age of 100 d-full death benefit
d
Which of the following is NOT an example of a valid insurable interest?
debtor in the life of the creditor
who makes up the medical information bureau (MIB)?
insurers
which of the following best described annually renewable term insurance?
it is level term insurance
which of the following is an example of a limited-pay life policy?
life paid-up at age 65
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
Untrue statements on the application unintentionally made by the insureds that, if discovered, would alter the underwriting decision of the insurance company, are called?
material misrepresentations
What is the major difference between a stock company and a mutual company?
ownership mutual companies are owned by policyholders and stock companies are owned by stockholders
a prospective insured received 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
what describes the specific information about a policy?
policy summary
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
respond to the customer's complaint
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?
return the application to the applicant for completion
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
the customer's associates, friends, and neighbors provide the report's data.
If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?
the insurer
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
it will increase because the insured will be 5 years older than when the policy was originally purchased
within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT: a. alcohol and tobacco consumption b. recent surgeries c. other insurance coverages d. family health history
c
The term "illustration" in a life insurance policy refers to:
a presentation of nonguaranteed elements of a policy
for variable products, underlying assets must be kept in
a separate account
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
aleatory
in insurance, an offer is usually made when
an applicant submits an application to the insurer
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 incorrect regarding a $100,000 20-year level term policy
at the end of 20 years, the policy's cash value will equal $100,000
which of the following is a feature of a variable annuity?
benefit payment amounts are not guaranteed
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
fair credit reporting act
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n):
inspection report
What type of premium do both Universal Life and Variable Universal Life policies have?
flexible
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will
issue the policy anyway and pay the face value to the beneficiary
what is the purpose of a conditional receipt?
it is intended to provide coverage on a date prior to the policy issue
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?
unilateral
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
premium receipt
in a survivorship life policy, when does the insurer pay the death benefit?
upon the last death