Chapter 3: Life Insurance Basics

what is the term used when a person sells his assets as a way to gain money?

liquidation

which of the following premium modes would result in the highest annual cost for an insurance policy?

monthly

when an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

executive bonus

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 **the policy is owned by the employee

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

their premiums are lower

an agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium and no conditional receipt is issued. when will coverage begin?

when the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

a STOLI policy

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

signed waiver of premium

what is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

which of the following statements regarding business overhead expense polices is NOT true?

benefits are usually limited to six months

Harry has just received his life insurance policy. In reviewing the title page, Harry was able to ascertain the following information EXCEPT

his spouse has been assigned the primary beneficiary

Stranger-oriented life insurance policies are in direct opposition to the principle of

insurable interest