Life and Health: Chapter 11 Missed Questions
The initial amount of credit life insurance may NOT exceed A. The borrower's annual income. B. The amount to be repaid under the contract. C. An amount set by statute and adjusted regularly for inflation. D. The borrower's monthly income.
B. The amount to be repaid under the contract The initial amount of credit life insurance may not exceed the total amount repayable under the contract of indebtedness.
All of the following statements are correct regarding credit life insurance EXCEPT A. Benefits are paid to the borrower's beneficiary. B. The amount of insurance permissible is limited per borrower. C. Premiums are usually paid by the borrower. D. Benefits are paid to the creditor.
A. Benefits are paid to the borrower's beneficiary In credit life insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.
When possible, what should insurers strive to eliminate from illustrations? A. Words they don't know B. Footnotes and caveats C. References to other products D. Policy amendments more than a page long
B. Footnotes and caveats Insurers will, as often as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.
Which of the following CANNOT be included along with illustrations used to sell life insurance? A. Original death benefit B. Vanishing premium information C. Name of the insurer D. Rating information
B. Vanishing premium information Illustrations used to sell life insurance cannot use the term "vanishing premium" - or any similar term - that implies the policy becomes paid up.
During replacement of life insurance, a replacing insurer must do which of the following? A. Designate a new producer for a replaced policy B. Send a copy of the Notice Regarding Replacement to the Department of Insurance C. Obtain a list of all life insurance policies that will be replaced D. Guarantee a replacement for each existing policy
C. Obtain a list of all life insurance policies that will be replaced
Regarding credit life insurance, who is responsible for reporting termination of debt to the insurer? A. The Department B. Debtor C. Beneficiary D. Creditor
D. Creditor In the event a credit life insurance policy is terminated before the originally scheduled termination date, the creditor must provide notice of termination of debt to the insurer within 60 days of the payoff date.
Which of the following types of insurance policies is most commonly used in credit life insurance? A. Increasing term B. Whole life C. Equity indexed life D. Decreasing term
D. Decreasing term Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. It is usually written as decreasing term insurance.
An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT A. Universal life. B. Variable universal life. C. Whole life. D. Level term.
D. Level term Individuals and dependents insured on a group life policy may convert to an individual policy issued by the same insurer. They can convert to any individual policy except term life.
Which of the following documents must be provided to the policyowner or applicant during policy replacement? A. Notice Regarding Replacement B. Disclosure Authorization Form C. Buyer's Guide and Policy Summary D. Policy illustrations
A. Notice Regarding Replacement During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.
How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer? A. 7 days B. 10 days C. 30 days D. 60 days
D. 60 days In the event a credit life insurance policy is terminated, a creditor must provide the insurer with a notice of termination of debt within 60 days of the payoff date.
Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced? A. Policy cost guides B. Consumer price indices C. Policy cost indices D. Cost comparison methods
D. Cost comparison methods Cost comparison methods are used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced.
Which of the following would be the beneficiary in credit life insurance? A. Insured B. Company C. Borrower D. Creditor
D. Creditor The creditor is the owner and the beneficiary of the policy.
Upon the submission of a death claim under a life insurance policy, when must the insurer pay the policy benefit? A. Immediately after receiving written proof of loss B. On the next anniversary of the policy C. Within 30 days D. Within 2 months
D. Within 2 months Upon receipt of a written proof of death and the right of the claimant to the proceeds, the insurer must pay death claims within 2 months.
