quiz 10

The following are guidelines that help avoid unfair underwriting for the risk of HIV/AIDS except: a.The insurer cannot deny coverage based solely on results from two different medical samples. b.The insurance company must get written consent from an applicant in order to give an HIV test. c.The information gathered must be handled confidentially. d.The insurer cannot deny coverage if the insured already has coverage and dies of AIDS.

a.The insurer cannot deny coverage based solely on results from two different medical samples.

Usually companies offer several options when a policy is rated. Below are all true except: a.Tabular rating b.Additional premium per $1000 of death benefit c.Reduced death benefits d.Charge for a lower age than the actual age

d.Charge for a lower age than the actual age

Money returned to policyholders from an insurance company`s earnings is called: a.Policy dividends. b.Participating dividends. c.Policyowners dividends. d.Shareholder dividends.

a.Policy dividends.

The State of California's required financial report includes all the following information except: a.The company's declined policy results. b.Any changes in financial condition, capital, and surplus. c.The financial condition of the company. d.Any liabilities, income, and expenses.

a.The company's declined policy results.

__________ is the amount by which an insurance company's assets exceed its liabilities and capital. a.Policy Dividends b.Earned surplus c.Shareholder interest d.Combined ratio

b.Earned surplus

Which rating would be considered best of the following choices? a.Moody Baa1 b.AM Best B++ c.Fitch BBB+ d.Standard and Poor A -

a.Moody Baa1

__________ guarantees that when a contract is annuitized, the income payments will be based on the greater of the actual contract value or a minimum payout base. a.Guaranteed Minimum Withdrawal Benefits b.Guaranteed Minimum Accumulation Benefits c.Guaranteed Minimum Income Benefits d.Guaranteed Payout Floor

c.Guaranteed Minimum Income Benefits

Which of the following is a true statement? a.Critical Illness riders pay benefits upon first diagnosis of a covered condition, and doesn`t need to result in death. b.Critical Illness riders pay for medical and nursing care. c.Accelerated Benefit riders have no restrictions and benefits may be used for anything the insured chooses. d.Accelerated Benefit riders pay benefits upon a terminal illness diagnosis of a covered condition and doesn't need to result in death.

a.Critical Illness riders pay benefits upon first diagnosis of a covered condition, and doesn`t need to result in death.

All the following companies rate insurance companies financial strength except: a.Fitch's Investor Service b.A.M. Best c.Standard and Poor d.Moody's

a.Fitch's Investor

What are the two methods most often used to compare the cost of life insurance policies? a.Interest Adjusted Cost Method and Traditional Net Cost. b.Annual Dividends, plus Cash Value, divided by c.Interest rate factor. Interest Adjusted Net Cost Method and Traditional Adjusted Cost. d.Premium Payment, minus Cash Value, plus Dividends.

a.Interest Adjusted Cost Method and Traditional Net Cost.

All the following are true concerning MIB except: a.MIB gets its information from claim forms and physicians. b.MIB keeps inputted information for only 7 years c.MIB does not reveal if a life insurance application was rated, issued or rejected. d.An application cannot be rejected solely on the information in MIB.

a.MIB gets its information from claim forms and physicians.

All the following statements are true regarding a disability income rider except: a.The monthly income is based on a % of the death benefit of the policy to which it is attached. b.The DI rider is exactly like the waiver of premium rider, except for the monthly income benefit. c.The insurance company will waive the policy premiums and pay a monthly income to the insured. d.The DI rider costs additional premium to add to a policy.

a.The monthly income is based on a % of the death benefit of the policy to which it is attached.

An accelerated death benefit rider (also known as living needs rider) in a life insurance policy allows which of the following? a.The policyowner may receive a portion of the proceeds prior to the death under certain circumstances. b.The policyowner can increase the death benefit at accelerated intervals. c.The policyowner can accelerate the premiums to shorten the premium paying period. d.The policyowner can accelerate the maturity date of the policy.

a.The policyowner may receive a portion of the proceeds prior to the death under certain circumstances.

In the event of a loss, the insured is required to submit all of the following except: a.A statement of claim form. b.A completed Statement of the acting doctor. c.A copy of the original insurance policy. d.A certified death certificate.

b.A completed Statement of the acting doctor.

Which of the following is true concerning AIDS testing and underwriting? a.A company may require an AIDS test of anyone who discloses that he or she has previously sought AIDS testing b.A policy may not contain exclusions for AID/HIV losses. c.No specific permission is required for a company to conduct AID/HIV testing on a applicant d.If one companys blood test reveals the presence of AIDS antibodies, that information will be revealed to other member insurers through MIB.

b.A policy may not contain exclusions for AID/HIV losses.

The purpose for this rider is to provide money for the insured to pay for medical and nursing care expenses if diagnosed with terminal illness. a.Long-term Care b.Accelerated Benefits c.Return of Premium d.Cost of Living

b.Accelerated Benefits

Morbidity tables are used by insurance companies to calculate: a.How long someone is going to live. b.The likelihood of sickness. c.How long someone will be sick. d.When a client is going to die.

b.The likelihood of sickness.

Jason has been disabled for 5 years and his policy had a waiver of premium rider. Which of the following is true? a.If Jason is no longer disabled and returns to work the premiums paid would be deducted from the cash value upon surrender of the policy. b.The premiums that were paid would have no effect on the either the cash value or the death benefit. c.If Jason died the five years of premiums paid would be deducted from the death benefit. d.The premiums paid would be considered a loan against the policy.

b.The premiums that were paid would have no effect on the either the cash value or the death benefit.

One of the underwriter's duties is classification of the risk. Which of the following would be incorrect concerning classification? a.A standard risk is an average risk or slightly better than average risk. b.When an underwriter rates or declines a risk this is considered to be an adverse underwriting decision. c.A preferred risk is reflected in the mortality table. d.A health individual can be rated a substandard risk due to their avocation.

c.A preferred risk is reflected in the mortality table.

Which of the following is a significant difference between individual policies and Group Life Insurance contracts? a.There is more adverse selection in group underwriting than there is in individual underwriting b.Individual Life policies are less likely to lapse c.Group underwriting is based on averages, such as the average age, the average working conditions and the average health condition of the group members d.Since individual applications are never taken on each member of a group, group underwriting is less complicated than individual underwriting

c.Group underwriting is based on averages, such as the average age, the average working conditions and the average health condition of the group members

Which rider would allow the insured to buy additional coverage at special times without a medical exam? a.Guaranteed benefit b.Renewable insurability c.Accelerated insurability c.Guaranteed insurability

c.Guaranteed insurability

Which of the following statements about the MIB is not true? a.The main goal is to prevent fraud and protect policyowners against selection of adverse risks. b.Data collected includes medical conditions, driving records, criminal activity, and more. c.Insurance companies may use MIB reports to decline a policy. d.The MIB collects information on consumers for use in the insurance underwriting process.

c.Insurance companies may use MIB reports to decline a policy.

All of the following are true regarding surplus except: a.Policyowner surplus is 50% of the underwriting income profit. b.Earned surplus is when you combine the shareholder surplus with the policyowner surplus. c.Shareholder surplus is 50% of the capital. d.Surplus is the amount when assets exceed its liabilities and capital.

c.Shareholder surplus is 50% of the capital.

All the following are disadvantages of the Traditional Net Cost Method except: a.The method doesn`t take into consideration the time value of money. b.Cost coverage will be affected by the actual dividends and cash values. c.The dividends and premium payments are projections. d.The method`s calculations depend upon the policyowner having the policy for a certain # of years.

c.The dividends and premium payments are projections.

How do the level term rider on a Family Maintenance Policy and the decreasing term rider on a Family Income policy differ from all other level and decreasing term riders in that: a.These riders are used to produce both an income and death benefit. b.These riders do not differ from other riders. c.These riders are used to produce income instead of a death benefit. d.It is used to produce an additional death benefit.

c.These riders are used to produce income instead of a death benefit.

All of the following statements pertaining to life insurance premiums are correct except: a.An insurance company invests the premium money it collects to earn interest b.The expense factor in premium rate-making frequently is referred to as loading c.For an insurance company, the costs of doing business must be reflected in its premiums d.In establishing premium rates, a company must assume it will earn a high rate of interest on its invested premiums

cd.In establishing premium rates, a company must assume it will earn a high rate of interest on its invested premiums

Jackson is paying $100 per month for his universal life policy which has a waiver of monthly deduction. Jackson was disabled 5 years. Which of the following is true? a.The insurer would pay the $50.00 monthly premium while Jackson is disabled. b.If Jackson died the five years of monthly deductions would be deducted from the death benefit. c.None of these are true. d.Jackson's mortality and expense charges would be paid however no money will be paid intothe cash account.

d.Jackson's mortality and expense charges would be paid however no money will be paid intothe cash account.

Higher retention rates are advantages for all parties involved in life insurance because: a.Lower commissions and higher expenses. b.Higher turnover leads to better profitability. c.Money doesn`t start to be made until the 6th year. d.Lower expenses and lower product prices.

d.Lower expenses and lower product prices.

Sometimes a substandard risk is also called _____________. a.MBI b.APS c.Reduced benefits d.Rated

d.Rated