L&H 1

C. Insurable interest and consent

A life insurance policy has a legal purpose if both of which of the following elements exist? A. Offer and counteroffer B. Policyowners and named beneficiaries C. Insurable interest and consent D. Underwriting and reciprocity

required a premium increase each renewal

A man purchased a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy....

Medical Information Bureau (MIB)

A nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals

Pay the policy proceeds only if it would have issued the policy.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will A. Pay the policy proceeds only if it would have issued the policy. B. Pay the policy proceeds up to an established limit. C. Not pay the policy proceeds under any circumstances. D. Automatically pay the policy proceeds.

Annually renewable term policy with a cash value account

A universal life insurance policy is best described as a/an

Rated

Another name for a substandard risk classification is

A. interest

During partial withdrawal from a universal life policy, which portion will be taxed? A. interest B. cash value C. principal D. loan

5 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

with the policy

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

Adhesion

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? A. Personal B. Adhesion C. Unilateral D. Conditional

B. Gradually increases each year by the amoun that the cash value increases

The death benefit under the Universal Life Option B A. Remains level B. Gradually increases each year by the amount that the cash value increases C. Decreases by the amount that the cash value increases D. Increases for the first few years of the policy, and then level off

variable contracts

The policyowner bears the investment risk in ....

D. Respond to the consumer's complaint.

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must A. Defend the report if the agency feels it is accurate. B. Change the report. C. Send an actual certified copy of the entire report to the consumer. D. Respond to the consumer's complaint.

2,500

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

C. To allow the consumer to compare the costs of different policies

What is the purpose of the buyer's guide? A. To list all policy riders B. To provide information about the issued policy C. To allow the consumer to compare the costs of different policies D. To provide the name and address of the agent/producer issuing the policy

B. Issue the policy anyway and pay the face value to the beneficiary.

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will A. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued. B. Issue the policy anyway and pay the face value to the beneficiary. C. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. D. Return the premium to Y's estate, since it has no obligation to pay the death claim.

C. When the application is signed and a check is given to the agent

When is the earliest a policy may go into effect? A.When the insurer approves the application B. After the underwriter reviews the policy C. When the application is signed and a check is given to the agent D. When the first premium is paid and the policy has been delivered

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

Which of the following best defines target premium in a universal life policy? A. The recommended amount to keep the policy in force throughout its lifetime B. The maximum amount the policyowner may pay on a policy C. the minimum amount to make sure the policy is annually renewable D. the corridor of insurance

C. Application

Which of the following is the basic source of information used by the company in the risk selection process? A. Warranty B. Consumer report C. Application D. Agent's report

C. Standard risk is representative of the majority of people.

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? A. Standard risk requires extra rating. B. Standard risk is also known as high exposure risk. C. Standard risk is representative of the majority of people. D. Standard risk pays a higher premium than a substandard risk.

Policy summary

a written statement describing the features and elements of the policy being issued

Variable life insurance

life insurance in which the benefits are a function of the returns being generated on the investments selected by the policyholder

replacement

terminating an existing policy or letting it lapse, and obtaining a new one

insurance application

the key source underwriters use for information about the applicant