Certification Exam | Chapters 1, 2, 3

What type of group plan requires 100% participation? Select one: a. Contributory b. Noncontributory c. Consideration d. Contributing

With a noncontributory plan, the employer pays the entire cost of premiums, and must have 100% participation. The correct answer is: Noncontributory

All of the following statements are true regarding warranties, EXCEPT: Select one: a. Warranties are statements that are guaranteed to be true in every respect. b. Insurance companies are held to the principle of warranties. c. Insureds are held to the principle of warranties. d. Breach of warranty is grounds for voiding an insurance contract.

Warranties are statements that are guaranteed to be true and are part of the legal contract. Insurers are held to the principle of warranties, not insureds. Breach of warranty is grounds for voiding an insurance contract. The correct answer is: Insureds are held to the principle of warranties.

The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called: Select one: a. Twisting b. Misrepresentation c. Churning d. Intimidation

When a producer misrepresents a policy from the company he or she represents in order to induce a policyholder to replace it with another policy issued by the insurer, the producer has engaged in churning. He or she has recirculated funds and policies within their own company, generally in order to secure a first-year commission. The correct answer is: Churning

Noncontributory plans: Select one: a. Must have 50% participation b. Must have 70% participation c. Must have 75% participation d. Must have 100% participation

With a noncontributory plan, the employer pays the entire cost of premiums, and must have 100% participation. The correct answer is: Must have 100% participation

Conversion from a group policy to an individual policy must be made within a maximum of how many days of termination from the group coverage? Select one: a. 15 b. 30 c. 45 d. 60

The conversion period is limited to a maximum of 60 days from the date of group coverage termination. The correct answer is: 60

Mildred is age 58. She withdraws a sum of money from her qualified plan. What is the penalty? Select one: a. 2% penalty tax b. 5% penalty tax c. 10% penalty tax d. 20% penalty tax

A 10% penalty tax is applied to distributions made from a qualified plan prior to the plan participant reaching the age of 59 1/2. The correct answer is: 10% penalty tax

Misrepresentation

A false statement or lie that can render the contract void.

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.

Who administers the National Do Not Call Registry?

Federal Trade Commission

In life insurance the risk of death increases with age, so premiums must be ______ in ______ years to account for this risk. Select one: a. lower; earlier b. higher; earlier c. lower; later d. higher; later

In life insurance the risk of death increases with age, so premiums must be higher in later years to account for this risk. The correct answer is: higher; later

A life insurance application can usually be backdated for a maximum of how many months? Select one: a. 3 months b. 6 months c. 9 months d. 12 months

In most states, a life insurance application can be backdated up to six months. The correct answer is: 6 months

At what age may a minor purchase a life or health insurance contract? Select one: a. 15 b. 16 c. 18 d. 21

Once a minor reaches the age of 15, they may purchase a life or health insurance policy. The correct answer is: 15

Insurable interest requires that an individual have a valid concern for the well being of the person insured. In a life policy insurable interest can be present in all of the following, EXCEPT: Select one: a. Business partners b. Second cousins c. Spouse or parent d. Creditors

Second cousins are not considered to have an insurable interest in an insured - just on the basis that they are related. The correct answer is: Second cousins

Telemarketers may call phone numbers not on the Do Not Call List from: Select one: a. 7am to 6pm b. 8am to 5pm c. 8am to 9pm d. 9am to 8pm

Telemarketers may call phone numbers not placed on the Do Not Call List from 8am _ 9pm. The correct answer is: 8am to 9pm

The agent must provide the buyer's guide to the applicant: Select one: a. Upon application b. When the conditional receipt is given to the applicant c. When the policy is delivered d. Upon application or at the time of policy delivery if a 10-day free look is provided

The buyer's guide must be provided by law to the applicant at policy delivery. The correct answer is: When the policy is delivered

What are the two terms used to describe whether or not special federal tax benefits apply to retirement plans? Select one: a. Qualified; nonqualified b. Advantaged; disadvantaged c. Favorable; unfavorable d. None of the above

The federal government distinguishes qualified plans as those offering special tax benefits. Nonqualified plans are those which do not offer special federal tax benefits. The correct answer is: Qualified; nonqualified

The ___________ approach calculates the amount of money a person is expected to earn over their lifetime to determine the face amount of life insurance needed, thereby placing a dollar value on the life of an individual. Select one: a. Human life value b. Needs c. Salary d. Social Security blackout

The human life value approach calculates the amount of money a person is expected to earn over their lifetime to determine the face amount of life insurance needed, thereby placing a dollar value on the life of an individual. The correct answer is: Human life value

Serena dies 15 days after her group life insurance coverage is terminated. She did not apply for individual coverage. Which of the following is true? Select one: a. Serena's beneficiary will receive 50% of the death benefit. b. Serena's beneficiary will receive the full death benefit. c. Serena's beneficiary will receive the death benefit minus the initial premium for the converted coverage. d. Serena's beneficiary will not receive the death benefit because Serena's group coverage was terminated.

The insured is covered under the group policy during the conversion period. The full death benefit will be paid to Serena's beneficiary. The correct answer is: Serena's beneficiary will receive the full death benefit.

For replacement transactions, an insurance producer's duties include all of the following, EXCEPT: Select one: a. Notify existing insurers of policies to be replaced b. Provide the applicant with a policy cost comparison statement c. Make a list of all existing policies the applicant intends to replace d. Leave a notice regarding replacement with the applicant

The insurer is responsible for notifying existing insurers of policies to be replaced. The correct answer is: Notify existing insurers of policies to be replaced

Presented with a completed claim form, an insurer wrote to the insured claimant requesting a preliminary claim report from the physician. Upon receipt of that report, the insurer required the subsequent submission of a proof-of-loss form. Was this insurer acting within its legal and ethical rights? Select one: a. Yes, settlement of claims can take time. b. No, the two forms provide the same information. This is a delaying action and thus illegal. c. No, these demands imply a threat on the part of the insurer. d. No, the insurer is failing to acknowledge with reasonable promptness communications regarding claims.

The two forms provide substantially the same information. Most likely, therefore, the request is simply an effort on the part of the insurer to delay settling a legitimate claim in a prompt, fair, and equitable manner to effect prompt, fair, and equitable. This delaying action is identified as illegal in most state codes. The correct answer is: No, the two forms provide the same information. This is a delaying action and thus illegal.

All of the following are considered minimum information that must be on a life insurance illustration, EXCEPT: Select one: a. Form number b. Dividend options, if any c. Nonguaranteed elements, if any d. Insured's marital status

While life insurance illustrations require the insured's name, age and sex, the insured's marital status is not to be on the policy illustration. The correct answer is: Insured's marital status

What type of group plan requires 75% participation? Select one: a. Contributory b. Noncontributory c. Consideration d. Contributing

With a contributory plan, the group members share the cost of the coverage with the employer, and must have at least 75% participation. The correct answer is: Contributory

Coverage is effective: Select one: a. With collection of the initial premium, approval of the application, policy issuance and delivery b. Upon collection of the application only c. Upon collection of the initial premium only d. When the applicant makes an offer to the insurer

With collection of the initial premium, approval of the application, policy issuance and delivery

Angela took out a $2,000 policy loan from her whole life insurance policy. The policy face amount is $200,000. If Angela does not repay the loan, how will the death benefit be affected? Select one: a. The death benefit will be increased by $2,000. b. The death benefit will be decreased by $2,000. c. The death benefit will remain the same. d. The death benefit will be decreased by $2,000 plus interest.

d. The death benefit will be decreased by $2,000 plus interest.

Coercion

An unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance.

What is business life insurance used for? Select one: a. An employee benefit b. A funding tool c. Business interruption insurance d. All of the above

Businesses use life insurance for three main purposes: as a funding tool, for business interruption insurance, and as an employee benefit. The correct answer is: All of the above

Which of the following does not demonstrate constructive delivery? Select one: a. The agent mails the policy to the insured b. The insurer mails the policy to the agent, who in turn, mails the policy to the insured c. A conditional receipt is issued to the applicant d. The insurer mails the policy to the insured

Constructive delivery occurs when the insurer divests all control over the policy to the policyowner. Delivery has not occurred when the agent issues a conditional receipt. The correct answer is: A conditional receipt is issued to the applicant

Life insurance policy illustrations must contain all of the following, EXCEPT: Select one: a. Agent's name b. Only the guaranteed policy elements c. Generic name of policy d. Insured's age and sex

Life insurance policy illustrations depict the nonguaranteed policy elements. The correct answer is: Only the guaranteed policy elements

Rebating

Any inducement offered in the sale of insurance products that is not specified in the policy

Stock insurers are also called

Nonparticipating, because they pay dividends to shareholders not policy owners.

A nonqualified plan: Select one: a. Permits discrimination in favor of certain employees. b. Must be approved by the IRS. c. Has tax-deductible contributions. d. Does not have tax-deferred interest.

Nonqualified plans are characterized by the following: do not need to be approved by the IRS, can discriminate in favor of certain employees, contributions are not tax-deductible, and interest earned on contributions is tax-deferred until withdrawn upon retirement. The correct answer is: Permits discrimination in favor of certain employees.

Maggie incurred a 10% penalty to distributions from her qualified plan because they were made before she turned: Select one: a. 55 1/2 b. 59 1/2 c. 62 d. 65

A 10% penalty tax is applied to distributions made from a qualified plan prior to the plan participant reaching the age of 59 1/2. The correct answer is: 59 1/2

Special tax advantages of qualified plans include all of the following, EXCEPT: Select one: a. Contributions made by the employer are tax-deductible and are not treated as taxable income for the employee. b. Distributions are tax-deferred. c. Interest on the contributions grows tax-deferred. d. Interest earned is tax-deferred.

Distributions are taxed, both principal and interest, because neither the contributions nor interest was previously taxed. The correct answer is: Distributions are tax-deferred.

Rates for insurance policies are based on: Select one: a. Marital status and age b. Sex, age and marital status c. Sex and age d. Sex only

Marital status cannot be used as the basis for insurance premiums. The correct answer is: Sex and age

Martin pays his policy premiums on a monthly basis. Which of the following terms best describes the frequency that Martin pays his premiums? Select one: a. Exclusion ratio b. Premium payment mode c. Net single premium d. Premium cycle

Premium payment mode describes the frequency that premiums are paid. The correct answer is: Premium payment mode

Which of the following best describes a life insurance policy in which the proposed insured is not required to undergo a medical examination? Select one: a. Easy policy b. Simply-issued policy c. Simplified issue d. Standard coverage policy

Simplified issue life insurance policies do not require the proposed insured to undergo a medical examination. The correct answer is: Simplified issue

This employee of the insurer assigns risk categories to applicants: Select one: a. Broker b. Agent c. Underwriter d. Actuary

Underwriters assign risk classifications to applicants. The correct answer is: Underwriter

Which of the following is not a characteristic of qualified plans? Select one: a. Plans cannot discriminate in favor of highly paid individuals. b. Employee contributions are not tax-deductible. c. Employer contributions are tax-deductible as a business expense. d. Interest earned is tax-deferred.

Employee contributions to a qualified plan are made with pre-tax dollars. The correct answer is: Employee contributions are not tax-deductible.

Employer-paid premiums used to fund group life insurance for the benefit of employees are: Select one: a. Paid with after-tax dollars b. Tax-deductible as a business expense c. Not tax-deductible d. Refunded to employers each year

Employer-paid premiums used to fund group life insurance for the benefit of employees are tax-deductible as a business expense. The correct answer is: Tax-deductible as a business expense

If required by the insurer, the statement of good health must be collected by the producer at the time of: Select one: a. Policy application b. Policy issuance c. Policy delivery d. None of the above

The agent collects the statement of good health upon policy delivery. If the agent notices the insured's health has worsened, the policy should not be delivered. The correct answer is: Policy delivery

All of the following are characteristics of qualified retirement plans, EXCEPT: Select one: a. Contributions made by the employer are tax-deductible as a business expense. b. Interest earned on the investment is tax-deferred until funds are withdrawn. c. Contributions are not tax-deductible for the employee. d. Plans are non-discriminatory.

Employee contributions to a qualified plan are made with pre-tax dollars. The correct answer is: Contributions are not tax-deductible for the employee.

The nonguaranteed elements of an insurance policy are: Select one: a. Illustrations b. Policy summary c. Policy face d. Policy terms and conditions

In the field of insurance, illustrations are defined as depictions that explain the complex and nonguaranteed aspects of a policy. The correct answer is: Illustrations

If a company issues a conditional receipt to an applicant who has paid an initial premium for a policy that does not require a medical examination: Select one: a. The company thereby divests itself of all risk. b. The applicant is immediately covered. c. The applicant must yet meet certain conditions before their application can be submitted to the company. d. The company thereby waives its right to refuse to issue a policy.

A conditional receipt is given when the applicant pays the first premium at the time they sign the policy application. A conditional receipt covers the applicant immediately from the date of application, providing that their application passes the underwriting requirements for the policy. Thus, the applicant is covered at the present time. If a medical examination is required, coverage begins after the applicant passes the medical examination. The correct answer is: The applicant is immediately covered.

All of the following are involved in the collection of an applicant's medical history, EXCEPT: Select one: a. The application for the insurance policy b. The attending physician statement c. The agent report d. The consumer report

A consumer report only contains information about an applicant's personal credit history, not medical history. The correct answer is: The consumer report

Which of the following statements about a temporary insurance agreement is CORRECT? Select one: a. Coverage begins when the application is signed and the premium is paid, assuming any required medical exam is scheduled within three days. b. It provides temporary coverage until an application is rejected or the policy is issued. c. It provides protection against death by accident, but not death from natural causes. d. It provides term insurance protection until the policy is converted to permanent insurance.

A temporary insurance agreement is just that: temporary coverage until an application is rejected or the policy is issued. The correct answer is: It provides temporary coverage until an application is rejected or the policy is issued.

Which of the following does not constitute policy replacement? Select one: a. Life insurance coverage that is converted to reduced paid-up coverage b. Life insurance coverage in which a loan is not repaid to the insurer c. Life insurance coverage that is terminated d. Life insurance coverage that is lapsed

As long as there is enough cash value in the policy to pay the cost of premiums, then a policy loan does not constitute replaced coverage. The correct answer is: Life insurance coverage in which a loan is not repaid to the insurer

Insurance contracts are conditional. Which of the following would be a characteristic of a conditional contract? Select one: a. If a loss occurs, then the insurance company will pay benefits. b. Only the insurance company makes legally enforceable promises in the contract. c. The contract is a "take it or leave it" contract. d. There is an unequal exchange of value with the contract.

Conditional contracts are "if-then" contracts: if a loss occurs, then the insurance company will pay benefits. The correct answer is: If a loss occurs, then the insurance company will pay benefits.

If Becky wants to take a distribution from her qualified retirement plan, she should know that distributions can be made: Select one: a. Only upon retirement. b. Only after age 59 1/2 c. Only after age 70 1/2 d. At any time.

Distributions from a qualified retirement plan may be made regardless of age when an employee retires, the employee ceases employment, or the plan is terminated. However, if distributions from a qualified plan are made prior to the age of 59 , then a 10% penalty tax is imposed. The correct answer is: At any time.

All of the following are part of the consideration element of an insurance contract, EXCEPT: Select one: a. The insurer's promise to pay a covered loss b. The applicant's statements on the application c. The initial premium paid by the applicant d. The applicant's promises

Insurance contracts are unilateral. Only the insurer is legally upheld to performing the promises made in the policy. The correct answer is: The applicant's promises

Level premium life insurance policies usually have ______ premiums in order to account for the greater risk of death with advancing age. Select one: a. higher b. lower c. increasing d. decreasing

Level premium policies usually have higher premiums in order to account for the greater risk of death with advancing age. With this in mind, level premium policyholders are essentially paying more in the earlier years of the policy, and less in later years than the risk of death warrants. The correct answer is: higher

A person with this risk classification will have a discounted premium from the rates provided in the C.S.O. tables. Select one: a. Preferred b. Standard c. Substandard d. Declined

Preferred risks are people who are in above physical condition and have longer life expectancies. Their premium rates will be lower. The correct answer is: Preferred

Tim's Toy Shop has gone bankrupt and needs to terminate all employees. Tim informs all employees of their right of conversion under the employer-sponsored group life plan. How many days are Tim's employees allotted to convert their group life coverage to individual coverage? Select one: a. 10 days b. 15 days c. 31 days d. 60 days

The conversion period is 31 days after termination from group coverage. This means the individual must apply for individual coverage within 31 days after the date of group coverage termination. The extension does not apply because Tim notified his employees of the conversion right. The correct answer is: 31 days

Which of the following best describes the process used to select and classify risks? Select one: a. Rating b. Discrimination c. Risk classification d. Underwriting

Underwriting is the process by which insurers select, classify and rate risks. Insurers carefully analyze each risk applicant to minimize adverse selection. The correct answer is: Underwriting

To determine the premium rate for health insurance policies, all of the following are used, EXCEPT: Select one: a. Mortality b. Interest earnings c. Loading d. Morbidity

Morbidity describes the rate at which illness occurs; mortality describes the rate at which a specific population dies. The correct answer is: Mortality

Net single premium is: Select one: a. Mortality - Interest b. Loading + Gross Premium c. Interest - Gross Premium d. Mortality + Loading

Net single premium is mortality minus interest. The correct answer is: Mortality - Interest

All of the following are characteristics of qualified retirement plans, EXCEPT: Select one: a. Employer's contributions are tax-deductible as a business expense. b. Employee contributions are made with pretax dollars. c. Contributions are not taxed until withdrawn. d. There are two types of qualified plans.

There are two types of retirement plans: Qualified and Nonqualified - not two types of qualified plans. The correct answer is: There are two types of qualified plans.

Contributory plans: Select one: a. Must have 50% participation b. Must have 70% participation c. Must have 75% participation d. Must have 100% participation

With a contributory plan, the group members share the cost of the coverage with the employer, and must have at least 75% participation. The correct answer is: Must have 75% participation

All of the following are true regarding purchase of personal life insurance for charity, EXCEPT: Select one: a. Coverage is taken out on the life of the person buying the policy. b. The charity is named as the beneficiary. c. The person buying the policy pays the premiums, which are usually tax-deductible. d. The person purchasing life insurance for charity must have insurable interest in the lives of the charity's members.

Life insurance may be purchased for charitable reasons. To make life insurance a charitable gift, a person purchases life insurance on themself and names the charity as beneficiary. In most cases, the insured's premium payments are tax deductible. The correct answer is: The person purchasing life insurance for charity must have insurable interest in the lives of the charity's members.

Which of the following best describes the tool underwriters use to determine the rate at which a group of people die? Select one: a. Exclusion ratio grid b. Morbidity rate graph c. Mortality table d. None of the above

Mortality tables are used to predict the likelihood of death in a given population. Data in mortality tables is categorized by underwriting factors such as age, sex and smoking habits. The correct answer is: Mortality table

Part II of the life insurance application includes: Select one: a. The agent's statement or report b. Medical Information c. General Information d. Inspection Statement

Most applications have the same basic parts _ Part I, General Information; Part II, Medical Information; and the Agent's statement or report. Part II contains medical information, provided by an examining physician and/or laboratories if the applicant is required to have a physical examination, and self-reported (as in use of alcohol, tobacco, etc.) The correct answer is: Medical Information

Leo, a producer, sat down with a prospective client to discuss a long-term care policy. He used a computer program to outline and emphasize his remarks. The visual presentation contained the principal benefits of the policy he was trying to sell. Although he mentioned that it also had, the usual, conditions, he did not include those in his visual presentation or specify what they were. The producer was engaging in: Select one: a. Twisting b. Misrepresentation c. Coercion d. Rebating

Statements are deemed to be misrepresentations if, when taken in the context of the whole presentation, they may tend to mislead or deceive a person. By detailing only the benefits, the producer was not giving a fair representation of the policy. The correct answer is: Misrepresentation

Which of the following statements is false regarding the conversion option for group life insurance policies? Select one: a. Converted coverage may be term or whole life, depending on the needs of the insured. b. The insured must receive a notice of their right to convert. c. The face amount of the converted coverage may be no more than that under the group coverage. d. Coverage during the conversion period is provided by the group policy.

The converted coverage must be whole life. The correct answer is: Converted coverage may be term or whole life, depending on the needs of the insured.

The third party that purchases a life insurance policy death benefit from a terminally ill insured is termed: Select one: a. Viator b. Viatical settlement c. Viatical settlement provider d. Insurance producer

Viatical settlement providers purchase chronically or terminally ill insureds' life insurance policies. The correct answer is: Viatical settlement provider

Joyce applies for a health insurance policy. When the agent delivers the policy to Joyce, an additional premium is required to account for Joyce's medical conditions. Joyce must agree to pay the additional premium before the policy is effective. The insurer has made: Select one: a. An invitation to offer b. Acceptance c. A counter-offer d. Consideration

When the insurer issued Joyce's policy with a higher premium, the insurer made a counter-offer. Joyce must agree to pay the extra premium in order for the coverage to take effect. The correct answer is: A counter-offer

Which of the following is considered an unfair claims practice? Select one: a. Splitting a commission with a prospect b. Failing to affirm or deny coverage within a reasonable time after receiving proof of loss c. Convincing a policyholder to lapse or surrender an existing policy to sell another policy d. Making any oral or written statement that is false, maliciously critical, or calculated to injure a competing producer

b. Failing to affirm or deny coverage within a reasonable time after receiving proof of loss

What happens if Becky takes her distributions from her qualified plan prior to age 59 1/2? Select one: a. The plan is cancelled and all cash accumulation in the plan is forfeited. b. A 10% penalty tax is assessed. c. Distributions cannot be made for one year. d. She loses her accrued interest.

If distributions from a qualified plan are made prior to the age of 59 1/2, then a 10% penalty tax is imposed. The correct answer is: A 10% penalty tax is assessed.

When must insurable interest be shown for a life insurance policy? Select one: a. When death benefits are paid b. When submitting the claim c. When the policy is delivered d. Upon policy application

Insurable interest for life insurance policies must be shown at the time of application. The correct answer is: Upon policy application

Another term for insurers' expense is: Select one: a. Interest earnings b. Loading c. Morbidity d. Premium

Insurers' expenses are called loading. These are the daily expenses of operating an insurance company. The correct answer is: Loading

All of the following are true regarding claims for life insurance policies, EXCEPT: Select one: a. The only claim in a life insurance policy is the insured's death. b. Upon the insured's death, the policy proceeds are paid to the beneficiary. c. In order for death benefits to be paid, the insurer must receive notice of the insured's death, but does not need the death certificate. d. Life insurance claims are typically paid within a few days of the insured's death, but the insurer may have up to 60 days to pay claims.

Prior to paying the proceeds, the insurer must receive proof of the insured's death (the death certificate). Upon receipt of the death certificate, the insurer will verify that the policy was in force when the insured died, whether or not the suicide clause applies, and that the proceeds are paid to the stated beneficiaries. The correct answer is: In order for death benefits to be paid, the insurer must receive notice of the insured's death, but does not need the death certificate.

In Ray's application for life insurance an applicant failed to complete one part regarding family history. In his statement, the agent described the family as long-lived and healthy. If an insurance company accepts the application in the incomplete form and the applicant for coverage dies young from a cardiac condition that had taken the lives of both his parents before age 50, will the company deny or accept the claim of the beneficiaries? Select one: a. It will deny the claim, based on misrepresentation. b. It will deny the claim, based on concealment. c. It will deny the claim, based on breach of warranty. d. It will pay the claim, because in accepting the application, it waived its right to the missing information.

The correct answer is: It will pay the claim, because in accepting the application, it waived its right to the missing information.

All of the following are true regarding viatical settlements, EXCEPT: Select one: a. A terminally or chronically ill insured can sell their life insurance policy to a third party in exchange for payment of a large portion of the death benefit. b. Viatical settlements are a type of life insurance contract. c. In a viatical settlement, the third party that purchases the insured's life insurance policy is termed the viatical settlement provider, and the insured is termed the viator. d. The portion of the death benefit the viator receives in a viatical settlement ranges from 50 to 80 percent of the death benefit.

Viatical settlements are completely separate from life insurance contracts. The correct answer is: Viatical settlements are a type of life insurance contract.

Jacob has been insured under his employer-sponsored group life insurance plan for seven years. He becomes totally disabled upon termination of his group coverage. Which of the following is true? Select one: a. Jacob has 10 days to convert his policy after the date of termination from group coverage. b. Jacob has 20 days to convert his policy after the date of termination from group coverage. c. Jacob may only continue his coverage through OBRA. d. Jacob must be permitted to continue group coverage for six months.

Group members who become totally disabled will be allowed to continue their group coverage for a maximum of six months after the onset of the total disability. The premium will not change. The correct answer is: Jacob must be permitted to continue group coverage for six months.

An individual signed an application for a $100,000 life insurance policy and paid the first premium on January 1. The agent issued an insurability receipt. A week later, the required medical examination proves the person insurable. If the person dies before the insurer approves the application: Select one: a. The coverage will be retroactively effective. b. The coverage will be retroactively effective, but the policy will only pay $50,000. c. No coverage will be provided. d. No coverage will be provided, but the premium will be refunded.

If the person pays the premium, receives an insurability receipt, and proves to be insurable, coverage will be effective retroactively. As a result, the beneficiary will receive the $100,000 death benefit. The correct answer is: The coverage will be retroactively effective.

Which of the following is not used to calculate the premium for life insurance contracts? Select one: a. Loading b. Interest c. Morbidity d. Mortality

Morbidity describes the rate at which illness occurs; mortality describes the rate at which a specific population dies. The correct answer is: Morbidity