Louisiana Life, Health & Accident Insurances

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

The insured will need a written consent of the insurer

Which is generally true regarding insured who have been classified as preferred risks?

Their premiums are lower

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract

A man decided to purchase a $100,000 Joint life policy on the himself & his wife. 8 years later, he died in an automobile accidents. How much will his wife receive from the policy?

$100,000

The insured is also the policyowner of a whole life policy. What age must attain to recieve the policy's face amount?

100

How long must an insurer keep the receipt of the policy delivery to the policy owner if the delivery was by mail

2 years

Which is NOT true concerning insurable interest as it applies to life insurance?

A debtor has an insurable interest in the life of a lender

Which of the following documents delivered to the policyowner includes info about premium amounts, cash values, surrender values & death benefits for specific policy years?

A policy summary

Who may complete a paramedical report?

A registered nurse

What is a material misrepresentation?

A statement by the application that. upon discovery, would affect the underwriting decision.

What documentation grants express authority to an agent?

Agents contract with the principal

Which best describes the concept that the insured pays a small amount of premium for a large amount of risk

Aleatory

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

What statement concerning the buy-sell statement is true?

Buy-sell agreements are normally funded with a life insurance policy

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

Cash values can be borrowed at any time

The proposed insured makes the payment on an insurance policy. If the insured should die, the death benefit will be paid if the policy is approved. What kind of contract?

Conditional

Something of value exchanged between the insurer & the insured is considered a

Consideration

Contracts that are prepared by 1 party on a-take-it-or-leave-it basis are classified as

Contracts of adhesion

What does "level" refer to in level term insurance?

Face amount

An applicant wants to buy a life insurance policy in which he can count on receiving the same benefit as stated in the contract. Which type should he buy?

Fixed

In insurance transactions, fiduciary responsibility means?

Handling insurer funds in a trust capacity.

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

What statement regarding insurable risks is NOT correct?

Insureds cannot be randomly selected

An insurer invests the money it receives from premiums paid by its insureds. Which of the following is true regarding the interest earned on these investments?

Is it used to lower premiums

Which of the following best describes MIB?

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

A married couple owns a permanent policy which covers both their lives & pays the death benefit only upon the death of the 1st insured. Which policy is that?

Joint Life Policy

Concerning Juvenile Life insurance, which of the following statements is INCORRECT?

Juvenile Life is classified as any life insurance purchased by a minor

Which of the following is NOT included on Part 1 of the application for insurance?

Medical background

an individuals tendency to be dishonest would be a

Moral hazard

An insured purchased an insurance policy 5 years ago. Last year she received a dividend check, this year she didn't what type of insurer?

Mutual

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

NOT taxable since the IRS treats them as a return of a premium

What describes the specific information about a policy?

Policy summary

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

All of the following are characteristics of group life insurance EXCEPT

Premium are determined by the age, sex & occupation of each individual certificate holder

All of the following are examples of risk retention EXCEPT

Premiums

What is the term for the entity that an agent represents regarding contractual agreements with 3rd parties?

Principal

Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

A situation in which a person can only lose or have no change represents

Pure risk

The risk of loss may be classified as

Pure risk and speculative risk

In what way can an agent demonstrate a high standard of ethics?

Putting client's interest before their own.

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

Reasonable expectations

Which of the following would be considered risk-sharing?

Reciprocal

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

Reduction

In case of a loss, the indemnity provision in insurance policies

Restores an insured person to the same financial state as before the loss

What is the main responsibility of a company's underwriting unit?

Risk selection

An application signs an application for a $25,000 policy, pays the initial premium, & receives a conditional receipt. If the applicant dies in an accident the next day

The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for

A group of 15 skydivers met at a seminar & began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together so they could qualify for group life insurance. After applying they were rejected. why?

The purpose of the group was to purchase life insurance

Which of the following best defines target premium in a Universal life policy?

The recommended amount to keep the policy in force throughout its lifetime.

Which is an example of a producer's fiduciary duty?

The trust that a client places in the producer in regard to handling premiums.

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?

Whether an insurable interest exists between the individuals

Which of the following types of insurance policy policies would perform the function of a cash accumulation?

Whole life

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant

With the policy

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

Workers compensation

Events in which a person has both the chance of losing are classified as

speculative risk

A producer is helping a married couple determine the financial needs of their if they die prematurely. This is a personal use of insurance known as?

survivor protection

All of the following are characteristics of a group life insurance plan EXCEPT

there is a requirement to prove insurability on the part of the participants

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT

Other insurance coverages

What is a major difference between a stock company & a mutual company?

Ownership

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

The responsibility of making certain that an application for insurance is filled out completely, correctly, & to the best of his or her knowledge is the responsibility of whom?

The producer

Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds?

vacation travel expenses

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business & for what amount?

Buy-sell agreement

Which option for Universal life allows the beneficiary to collect both the death benefit & cash value upon the death of the insured?

Option B

An insured pays a $100 premium, yet the insurer promises to pay $10,000 for covered loss. What characteristic of insurance?

Aleatory

Which of the following types of agent authority is called "perceived authority"

Apparent

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

Application

When must an insurable interest exist in a life insurance policy?

At the time of application

An underwriter is reviewing the medical questions in the application & needs more info due to a medical situation the applicant had in the past. What will the underwriter require?

Attending Physician Statement

All of the following are factors that an underwriter could use to select & classify the risk EXCEPT

National origin

Which of the following is NOT true regarding the needs approach method of determining the value of an individual life?

Need is predicted using the number of years until the insured's retirement

What is the definition of of a unilateral contract?

One-sided: only one party makes an enforceable promise.

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have atleast completed secondary education

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

The policy is owned by the company

which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

Units with the same or similar exposure to loss are referred to as

Homogeneous

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

Human life value approach

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional & material

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

Variable Life insurance is based on what kind of premium?

Level fixed

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

The reduction, decreases or disappearance of value of the person or property insured against is known as

Loss

Which of the following is the basis for a claim against an insurance policy?

Loss

Which of the following is an example of liquidity in a life insurance contract?

The cash value available to the policyowner

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

The employer is the owner & the beneficiary

An employee is insured under her employer's group life plan. If she terminates her group coverage, which statement is INCORRECT?

The insured may choose to convert to term or permanent individual coverage

What is the purpose of a key person insurance?

To lessen the risk of financial loss because of the death of a key employee

Which of the following is an example of risk retention?

To minimize the insured is level of liability in the event of loss

Which employees of an insurance company are responsible for the final risk selection?

Underwriters

Insurance companies may be classified according to the legal form of their ownership. The company organized to return any surplus money to the policyholders is

a mutual insurer

In classifying a risk, the Home office underwriting department will look at all of the following EXCEPT

applicants past income

In terms of Social Security what is the name of the period after the youngest child turns 16 & before surviving spouse may start receiving retirement benefits?

blackout period

All of the following are duties & responsibilities of producers at the time of the application EXCEPT

change any incorrect statement on the application by personally initialing next to the corrected statement

If an application for life insurance policy is found to be a substandard risk, the company is most likely to

charge a higher premium

Which of the following is TRUE about credit life insurance?

creditor is the policyowner

When an employee can obtain coverage under a group insurance policy, coverage continues in force

for 31 days

All of the following are business uses of life insurance EXCEPT

funding against general company financial loss

The agent is known as the "Field Underwriter" because the info the gather for the insured, this helps the insurer

pre-select applicants that would present lower risk of loss for the insurer