Life Insurance Basics (Ch. 2)

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

Which of the following is the basic source of information used by the company in the risk selection process?

Application

When must insurable interest exist in a life insurance policy?

At the time of application

Which of the following statements regarding buy-sell agreements is true?

Buy-sell agreements are normally funded with life insurance

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT: a. the employer pays a bonus to a selected employee to fund to policy b. it is considered a non qualified employee benefit. c. the policy is owned by the company d. any type of insurance policy may be used.

C

What 2 parts make up a life insurance application?

General info and medical info

Who makes up the medical information bureau (MIB)?

Insurers / almost every life insurance company

Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death?

Life insurance proceeds

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

Needs Approach

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

Premium amounts & surrender values

What are the most common uses of personal life insurance?

Survivor protection, estate creation, and cash accumulation

What is the purpose of a disclosure statement?

To explain features and benefits of a proposed policy to the consumer