Life Insurance Basics
Which of the following presents the highest mortality risk:`
50 year old male
An insurable interest must exist when:
A life insurance policy is issued
Which of the following applicants for Life insurance is most likely to obtain coverage as a standard risk?
A traveling heavy-equipment salesperson
Regarding Social Security survivors benefits, the period of time between when the youngest child turns age 16 and a surviving spouse becomes eligible for Social Security benefits is called the:
Black-out period
Which of the following would not be a situation where insurable interest would exist:
Business on customers
A plan, usually funded by Life insurance, to purchase a deceased partner's share of a business is known as a:
Buy and sell agreement
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to:
Charge an extra premium
Which federal law explains to a customer their legal rights when a consumer report will be ordered by an insurer:
Fair Credit Reporting Act
In order to avoid unfair discrimination, life and health insurance rates must be the same:
For those who present essentially the same hazard
Fixed life insurance products are guaranteed by the insurance company's:
General account
A life insurance preferred risk has all of the following characteristics, EXCEPT:
High Income
Insurance may be considered to be in force when the:
Insurance company mails a policy to the producer and the producer delivers it to the proposed insured and collects the first premium
In the formation of a life insurance contract, the special significance of a Conditional Receipt is that it:
Is intended to provide coverage on a date earlier than the date of the issuance of the policy
Which of the following is true concerning life insurance purchased by business partners:
It is based upon a contractual "buy/sell" agreement
All of the following are true about insurable interest on life insurance, EXCEPT:
It must exist at the time of death
All of the following statements about Life insurance and the risk it covers are true, EXCEPT:
Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured
On May 8, a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approved the application on May 14 and issued the policy on May 15. The producer delivered the policy on May 26 and collected the first premium. The coverage became effective on:
May 26
A binder:
May be oral or written
All of the following are true about Social Security benefits, EXCEPT:
Monthly payments must remain the same once benefits commence
Life insurance mortality tables are based upon which of the following:
People and time
An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation, EXCEPT:
The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used the report
Which of the following is true when Life insurance is used to fund an Executive Bonus plan:`
The employee owns the policy
A life insurance policy summary is required to include all of the following information, EXCEPT:
The name of the beneficiary
In life insurance, insurable interest must exist at which point in time:
The time of application only
Which of the following is true of the duties of the Securities and Exchange Commission (SEC):
They are responsible for enforcing Federal securities laws
Which of the following is true of the duties of the Financial Industry Regulatory Authority (FINRA):
They are responsible for making sure that their members follow Federal laws and rules
All of the following are true about Life insurance "inspection reports" EXCEPT:`
They relate to an applicant's medical history
An underwriter does all of the following, EXCEPT:
adjust losses
All of the following are life insurance policy premium modes, EXCEPT:
bi-monthly
When insuring substandard life-insurance risks, provision is usually made for the expected higher death rate by:
charging an extra premium
The insurance business is regulated primarily by:
state laws
The Fair Credit Reporting Act provides:
That the applicant for insurance be informed that a consumer report may be requested
If a proposed insured has a hazardous occupation, the insurance company may:
Rate the insured
A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, the producer realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should:
Refuse to deliver the policy or to accept any premium offered
Statements made by an applicant for a life insurance policy that are supposed to be true are referred to as:
Representations
insurance underwriters may check an applicant's records with all, EXCEPT:
The Internal Revenue Service (IRS)
if an applicant for a life insurance policy is a student pilot, which of the following is true:
They would have to pay more than a standard risk for their coverage
The department within an insurer that is concerned with the acceptance or denial of applicants, as well as the determination of what risk those applicants pose, is the
Underwriting department
