Life =&Health Fianl 1(2)

A&H coverage becomes effective when the:

First premium has been paid and the application has been approved

All of the following may be included in the Accelerated Death Benefit Rider, EXCEPT:

Long-term Disability Remember, with the Accelerated Death Benefit (also known as the Living Benefits Rider), the insured gets an advance of the face amount in the event of a terminal illness. This money must be used for the illness. So, of the choices, long-term Disability makes the least sense.

All of the following statements about sources of underwriting information are true, EXCEPT:

The contents of an inspection report cannot be disclosed to the applicant Contents of inspection reports may be disclosed to applicants, but the producer or company is under no obligation to give a copy of the report to the client. Under the Fair Credit Reporting Act, the producer or company is obligated to inform the client of the name and address of the reporting agency who furnished the report.

Which of the following statements about the 10-day Free Look provision in an A&H policy is/are true? I. It allows the applicant to review the policy at no cost II. The 10-day period begins on the date of application

I only During the first 10 days after policy delivery, the clients may return the policy and receive all premiums paid back.

Which of the following statements about Accidental Death coverage in Life insurance is/are true? I. It does not increase the non-forfeiture values of the basic policy or the dividends under a participating policy II. Benefits are payable when the death of the insured is the result of an accident

Both I and II The ADB (Accidental Death Benefit) rider pays double or triple indemnity if the insured dies as a result of an accident. Death must result within 90 days of the accident or it is termed to be from natural causes and only single indemnity is paid. The extra premium charged for this rider does not go toward cash-value accumulation and it must be shown separately from the Life insurance premium. It has nothing to do with the amount of dividends that a policyholder, who has a "participating" policy, may receive. A participating policy is one issued by a mutual insurance company; dividends paid out by mutual insurance companies are considered to be a return of overpayment of premium in the first place and therefore not taxable according to the IRS.

If an applicant applies for Health insurance, tells the truth to the best of his knowledge, pays the premium and receives a conditional receipt and no physical exam is required, coverage will start on:

Date client signed application The earliest coverage can begin is the date of application. That is only the case when the client has paid the premium and has no conditions to fulfill. That was the case in this question. Coverage is effective as of date of application. If there had been conditions to satisfy, then the coverage would be effective when the conditions were satisfied. The condition is often to pass a physical. Another way to say the same thing (which the test likes to use) is that coverage is effective at earliest date of application or when the client passes a physical, whichever occurs later. Since in this question there was no physical to pass, coverage is effective as of date of application.

Which of the following Settlement Options provides for payments to be made in regular installments of a specified amount until the principal and interest are exhausted?

Fixed Amount When the insured dies, the beneficiary may select any one of 5 Settlement Options. They are: Cash; Fixed Amount (for example, the beneficiary elects to receive $1,000 a month for as long as the money lasts); Fixed Period (the beneficiary chooses to be paid out over a 20-year period); Interest (the beneficiary leaves all the proceeds with the company to accumulate additional interest), and Life Income (the beneficiary takes the policy proceeds as cash and buys a Straight Life or Pure Life Annuity).

Which of the following statements about Renewable Term policies is/are true? I. An insurance company can limit the number of renewals by policy provision II. The policy owner can choose to renew with premiums based on original age or attained age

I only Most Level Term policies are renewable, because if they were not, no one would buy them. The best example is 10-year Level Term. Here the company simply uses an "average rate" over the 10-year period, so it would have been cheaper for the client to buy Annual Renewal Term (ART) for the first four years of the contract and more expensive to buy ART after the fifth year of the contract. Renewals of Term Insurance are permitted without proof of good health and are always at the insured's current (attained) age. However, Term policies are only renewable up to a certain age, usually age 60 or 65. After that point, the insurance company does not want to renew your coverage since the chance of death has greatly increased.

Which of the following statements about a Conditional Receipt is/are true? I. It guarantees that a policy will be issued II. It is a receipt for the first full premium

II only A Conditional Receipt is a receipt for the first full premium paid by the applicant. It does not guarantee that the policy will be issued, since often the applicant must first take and pass a physical exam. It does state, however, that if the applicant meets all the conditions required of him by the company, coverage could be effective as early as the date of application, assuming the premium was also paid at that time

Which of the following statements about group A&H provisions and practices is/are true? I. Insurance company practices are generally less liberal under Group policies than under Individual policies II. Experience rating is generally utilized under Group policies

II only Group coverage is usually better than individual coverage and often has no underwriting or probationary periods. Rates are often based upon claims experience in larger groups.

Which of the following policies can be written on a Non-cancelable and Guaranteed Renewable basis? I. A Major Medical Expense policy II. A Disability Income polic

II only Major Medical policies are cancelable, meaning the insurer may cancel you at any time with proper advance notice. AD&D and Disability Income policies often voluntarily give up the right to cancel as a marketing strategy and may be non-cancelable, guaranteed renewable or both.