Life insurance basics

When must insurable interest exist in a life insurance policy?

At the time of application

When must the Buyer's Guide be delivered to the proposed insured?

At time of application

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

Human life value approach

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?

the employer is the owner and beneficiary

A key person insurance policy can pay for which of the following?

Costs of training a replacement

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

Inspection report

The mode of premium payment

Is defined as the frequency and the amount of the premium payment.

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

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 individuals must have insurable interest in the insured?

Policyowner

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 the insured's death.

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Which of the following would NOT fall into the category of costs associated with death?

The expense of a vacation for surviving family members

Which of the following is the best reason to purchase life insurance rather than annuities?

To create an estate

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 would least likely be considered a legitimate need that would be paid by insurance proceeds?

Vacation travel expenses

In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits?

blackout period

All of the following are business uses of life insurance EXCEPT

funding against general company financial loss

Attempting to determine how much insurance a family would require based upon their financial objectives is known as

needs approach

Which of the following is NOT an example of a business use of Life Insurance?

workers compensation

Which of the following is NOT required on an illustration used in the sale of a life insurance policy?

The name of the primary and secondary beneficiaries

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

All of the following information about a customer must be used in determining annuity suitability EXCEPT

beneficiary's age