Chapter 2
ll of the following are true regarding an Attending Physician's Statement (APS), except: A An MIB report can be used in place of an APS B The insurer pays the physician for completing and forwarding the APS C Applicants must sign a release in order for their physician to respond to an APS request D They are used in cases where the application or medical records reveal conditions that require further explanation
A An MIB report can be used in place of an APS
hat is the primary reason why States have 'outlawed' Stranger/Investor Originated Life Insurance (STOLI) transactions? A At policy inception there is a lack of insurable interest B The transaction avoids State taxes C The 'strangers' or 'investors' are exempt from licensing D The insured may not be able to meet the premium requirements
A At policy inception there is a lack of insurable interest
In a replacement transaction, all of the following are insurer duties and responsibilities, except: A Contact the client to assure that they understand the transaction B Abide by the state required holding period for all replacement documentation C Notify the existing insurer D Maintain copies of the information provided by the producer
A Contact the client to assure that they understand the transaction
Which of the following is included in Part II of a Life Insurance Application? A Family member's age and cause of death B Gender C Date of birth D Marital status
A Family member's age and cause of death
Geographic location or personal information such as occupation, marital status, and relationship of insured to beneficiary or known or suspected homosexuality or bisexuality cannot be used to require a(n): A HIV test B Eye exam C Dental exam D Foot exam
A HIV test
If premiums were submitted at the time of application, when is a life insurance policy considered constructively or legally delivered by the insurer? A Once the insurer mails the issued policy as applied for to the producer B Once the producer delivers the policy to the applicant and obtains a signed delivery receipt C At the time of application if premiums were collected and a conditional coverage receipt was issued by the producer D At the time the producer receives the rated policy and is required to collect additional premiums
A Once the insurer mails the issued policy as applied for to the producer
A producer submits a completed application to the insurer along with the premium check after giving the applicant a conditional receipt. If the applicant completes the required medical exam, but dies prior to the insurer issuing a policy as applied for, what is the insurer's responsibility? A To pay the claim in full as long as the conditions of the receipt were fully satisfied by the insurer B To keep the premium and reject the claim C To refund any and all premiums paid D To refund premiums paid less costs associated with any medical exams
A To pay the claim in full as long as the conditions of the receipt were fully satisfied by the insurer
When producer Pete delivers a policy, he should also do which of the following? A Collect any amounts due for postage and handling B Explain the policy, provisions, riders, and any exclusions C Collect at least 3 referrals D Demand the balance of the annual premium
B Explain the policy, provisions, riders, and any exclusions
The Medical Information Bureau (MIB) is formed by: A Employers B Insurance companies C The Government D Medical professionals
B Insurance companies
What information must appear on the policy summary provided to a life insurance client? A A copy of the producer's license B The producer's name and address C The producer's name and home address D The producer's agency's name and address
B The producer's name and address
In California, in a replacement situation, it is recommended that an existing policy not be terminated until: A The existing policy has been in force for at least 10 years B The replacing policy is issued and delivered C The existing policy has been in force for at least 5 years D The application for the replacing policy has been completed
B The replacing policy is issued and delivered
If a trial life insurance application is submitted, when would the coverage take effect? A When the policy is issued B When the policy is delivered by the agent and the premium is paid C When the application is signed D When the policy is delivered
B When the policy is delivered by the agent and the premium is paid
A group plan is designed to insure all of the following, except: A Employees B Debtors C Creditors D Members
C Creditors
Which of the following would be considered a good result from an underwriter's action when an individual Life Insurance Policy is issued as applied for? A Issued rated-up B Application is rejected C Issued standard D Issued with exclusions or limitations
C Issued standard
Which of the following is not a factor in premium determination? A Mortality B Expenses C Reserves D Interest
C Reserves
What type of a receipt provides immediate coverage during the underwriting period (rather than a specified number of days) until a policy is issued or the application is declined? A Guaranteed B Conditional C Temporary insurance agreement D Trial
C Temporary insurance agreement
A young couple just starting out on a limited budget, but having a large need for life insurance coverage, most likely would be best suited for ________ life insurance: A Variable B Whole C Term D Universal
C Term
When calculating premium of life insurance policies, insurers assume all of the following, except: A Claims are paid at year end B Premiums are paid in advance C The actual life expectancy of each group of insured's D Premiums will be invested and earn interest
C The actual life expectancy of each group of insured's
Whenever an answer to a question on an application needs to be corrected, how is that best handled? A The producer indicates the correct information in the comments section of the application B Submit the application as is and see what the home office underwriters decide to do once they have had time to review it C The applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application D By using correction fluid or tape to cover up the incorrect information and writing in the correct information
C The applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application
A life insurance applicant pays the initial premium at the time of application and receives a Conditional Receipt. If coverage is issued as applied for, when did coverage go into effect? A The date the policy was delivered B The date the policy was issued C The date of the application or upon the completion of any required medical exam (whichever is later) D The day the check clears the bank
C The date of the application or upon the completion of any required medical exam (whichever is later)
The process of calculating life insurance net premium requires consideration of all of the following, except: A The insured's gender B The rate of interest assumed C The morbidity rates to be used D The insured's age
C The morbidity rates to be used
When reviewing an application, the underwriter decides to reclassify the risk. What does that mean for the client? A The mode could increase or decrease B The death benefit could increase or decrease C The premium could increase or decrease D The policy period could lengthen or shorten
C The premium could increase or decrease
hrough the purchase of insurance, a person is essentially: A Eliminating risk B Retaining risk C Transferring risk D Avoiding risk
C Transferring risk
Premiums paid in advance are considered what type of premiums until coverage has been provided? A Residual B Deposit C Unearned D Earned
C Unearned
If a client chooses to pay premiums other than annually, what can he or she expect? A Lower overall total premium costs B Better client service C Higher surrender charges on some policies D Additional charges to offset lost interest, earnings, and increased administrative costs
D Additional charges to offset lost interest, earnings, and increased administrative costs
Which of the following transactions is not defined as a replacement? A Any transaction in which new life insurance or an annuity is to be purchased and it is known that the existing contract will be converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values B Any transaction in which new life insurance or an annuity is to be purchased and it is known that the existing contract will be subjected to borrowing for amounts in the aggregate exceeding 25% of the loan value set forth in the policy C Any transaction in which new life insurance or an annuity is to be purchased and it is known that the existing contract will be lapsed, forfeited, surrendered, or terminated D Any transaction in which the proposed life insurance is to replace life insurance issued by the same insurer
D Any transaction in which the proposed life insurance is to replace life insurance issued by the same insurer
When the initial premium is not paid with the application, what must the producer do before coverage can begin? A Collect and submit the outstanding premium to the insurer within the free look period B Obtain a signed State of Good Health and policy delivery receipt from the applicant/insured when the policy is delivered C Deliver the policy if it is issued and obtain a policy delivery receipt D Collect the premium and obtain a signed Statement of Good Health from the applicant/insured at time of policy delivery
D Collect the premium and obtain a signed Statement of Good Health from the applicant/insured at time of policy delivery
When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would: A Remains the same B Fluctuate C Decrease D Increase
D Increase
The person who generally has the rights in the insurance policy is known as the ____________. A Insured B Beneficiary C Insurer D Policyowner
D Policyowner
Which of the following best describes producer field underwriting? A Conducting blood pressure readings, taking the applicant's pulse, and drawing blood B Obtaining the applicant's medical records, conducting a credit history check, and logging in to the MIB C Interviewing the applicant's neighbors about the applicant's morals and character D Taking the time to probe beyond the stated questions on the application based upon the applicant's responses
D Taking the time to probe beyond the stated questions on the application based upon the applicant's responses
hich of the following receipts states that coverage will begin immediately for a specific length of time, regardless of whether the applicant is ultimately approved for coverage by the insurer? A Acceptance approval receipt B Conditional receipt C Trial receipt D Temporary insurance agreement
D Temporary insurance agreement
Which one of the following is not required to sign a life insurance application? A The applicant/insured B The producer C The guardian of a minor applicant D The beneficiary
D The beneficiary
Which of the following is true? A The insured and the policyowner are usually the same, but not necessarily B The applicant, insured, and policyowner must approve any changes to a policy in writing C The insured and the policyowner are always the same D Any changes to a policy must be approved by both the insured and policyowner in writing
A The insured and the policyowner are usually the same, but not necessarily
All of the following are factors that are taken into consideration when using the Human Life Value approach in determining the proper amount of life insurance coverage, except: A The insured's educational background B The insured's annual income C An inflation assumption D The insured's planned retirement age
A The insured's educational background
The Buyer's Guide to Life Insurance provides basic information concerning all of the following, except: A The interest rates of the different policies which are sold B The comparative costs of the different types of policies which are sold C The different types of policies which are sold D Life insurance
A The interest rates of the different policies which are sold
Which of the following is a type of rating that does not involve an extra premium being assessed? A The lien plan B Sub-standard C The flat rate D Rated up age
A The lien plan
It is a violation to recommend that an insured of what age or older purchase an 'unnecessary replacement annuity'? A 60 B 55 C 62 D 65
D 65
Each agent who accepts an application for life insurance or annuity that involves replacement of any existing life or annuity policy must submit to the insurer: A A Buyer's Guide B A comparative summary of the two companies and polices involved in the transaction C All sales literature used during the solicitation D A Notice Regarding Replacement
D A Notice Regarding Replacement
A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________. A An advertisement B A policy summary C A hypothetical D Sales literature
B A policy summary
An agent who violates any replacement regulations is liable for an administrative penalty of no less than how many dollars for the first violation? A $250 B $750 C $1,000 D $500
C $1,000
Whenever an answer to a question on an application needs to be corrected, how is that best handled? A By using correction fluid or tape to cover up the incorrect information and writing in the correct information B Submit the application as is and see what the home office underwriters decide to do once they have had time to review it C The applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application D The producer indicates the correct information in the comments section of the application
C The applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application
