NW Mutual quiz 2 - Life Insurance basics
Terminally ill patients are expected to survive how many months or less?
24
According to the 2001 CSO Table, at what age will the terminal reserves be reached?
120
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?
permanent
Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called
Suitability
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
Which of the following is an owner of a life insurance policy who enters into a viatical settlement contract?
Viator
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
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
Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?
insurance guaranty association
Which of the following best describes gross annual premium?
net premium plus expenses
Which of the following is an example of liquidity in a life insurance contract?
the cash value available to the policyowner
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 valid assignment
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 what reason may a life insurance producer backdate a life insurance policy?
to avoid an increase in premium rate for the insured
Which of the following would NOT fall into the category of costs associated with death? The expense of a vacation for surviving family members funeral exp final medical exp of the insured day to day exp of family
vacation
which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? vacation travel expenses debt cancellation day care travel exp for funeral
vacation travel expenses
who negotiates viatical settlement contracts on behalf of a viator?
viatical settlement broker
Once a viatical contact has been established, how long does the viator have to rescind the contract?
15 calendar days
which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?
Need is predicted using the number of years until the insured's retirement
Which of the following is usually true of a participating life insurance policy?
Pays dividends to policyowners
Which of the following is not an example of a business use of life insurance?
Workers Compensation IS NOT
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the intitial premium, and the applicant completes an acceptable Statement of Good Health
Which of the following documents delivered to the policyowner includes information about premium accounts, cash values, surrender values and death benefits for specific policy years?
a policy summary
What does "liquidity" refer to in a life insurance policy?
cash values can be borrowed at anytime
if an applicant for a life insurance policy is found to be a substandard risk, than the insurance company is most likely to
charge a higher premium
Violation of unfair discrimination law may result in all of the following penalties EXCEPT refusal to renew licenses fines of up to $500 for each act fines of up to $1,000 for each act suspended licenses
fines of up to $1,000 for each act
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 insured death insured current and future income insureds annual expenses effect of inflation on income overtime
predicted needs of the family after the insureds death
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
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 individuals