Northwestern Mutual - Life Insurance Basics
What is the blackout period for social security benefits?
A period of time during which the surviving spouse does not receive benefits
What does liquidity mean in a life insurance policy?
Availability of cash value
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?
Either on the date of the application or the date of the medical exam (whichever occurs last)
Life insurance may be used to pay state inheritance taxes and federal/estate taxes eliminating the need to sell assets from the estate. What is this called?
Estate conservation
What type of policy is typically issued without proof of insurability from the insured?
Group policy
What type of policy issues certificants of insurance to the insureds?
Group policy
How does the premium mode affect the total premium paid for insurance for the year?
Higher frequency of premium payments will result in higher overall premium
If an insured changes his payment play from monthly to annually, what happens to the total premium
It will decrease
What type of insurance would perform the function of cash accumulation?
Life Insurance
What type of insurance creates an immediate estate?
Life insurance
What is included in Part 2 of a life insurance application?
Medical information about the prospective insured
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should it be?
Permanent
What type of life insurance offers an applicant a cash value element?
Permanent insurance (usually, whole life)
What document describes the specific information about a policy?
Policy Summary
what is the term that describes the frequency and the amount of the premium payment?
Premium mode
What are illustrations in a life insurance policy?
Presentation of nonguaranteed elements of the policy
What is the main responsibility of a company's underwriting unit?
Risk selection
What are the personal uses of life insurance?
Survivor protection, estate creation/conservation, cash accumulation/liquidity
What is the purpose of the agent's report during the application process?
The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process
Who is responsible for the contents of insurance advertisements?
The insurance company
An insured receives a monthly summary of his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Variable
What is policy replacement?
a new policy is issued while an existing policy is terminated or reissued with a reduction in cash value
When must insurable interest exist in a life insurable policy
at the time of application
When must the policy summary for a life insurance policy be delivered to the policy owner?
at the time of the policy delivery
What are the three main instances when insurable interest exists in life insurance?
insuring your own life, the life of a family member, the life of a business partner or someone who has a financial obligation to the policyowner
Mortality tables are used by insurance companies to predict what?
life expectancy and the death rates for specific groups of individuals
All other factors being equal, which premium payment mode will required an overall higher premium: monthly or annual?
monthly
What are the three factors that determine the premium for a particular life insurance policy?
mortality, interest, and expense
what document must a producer provide to the insured during the policy replacement?
notice regarding replacement
What term describes the fee a person pays an insurance company to receive coverage?
premium
a business in the owner and beneficiary of a key person life policy. What the business collects the policy benefit, how is it taxed?
the benefits is received tax free
Who is a replacing insurer?
the company that issues a new policy during policy replacement
Who is the beneficiary on a key person life insurance policy?
the employer
If an applicant for a life insurancy policy and the potential insured are two different people, what would be the underwriter's main concern?
the existence of insurable interest between the applicant and the insured
When planning for survivor protection in life insruance, what needs to be considered?
the insured current assets, liabilitys and survivor's needs
Who must have insurable interested in the insured?
the policyowner
in calculating the amount of life insurance needed, what is the needs based approach
the predicted needs of a family after the premature death of the insured
What is insurance underwriting?
the process of risk selection and classification
What is the main purpose of the regulation on life insurance policy illustrations?
to help the public make educated decisions about buying life insurance
What is the purpose of key person insurance?
to minimize the risk of financial loss caused by the death of a key employee
