Life Insurance Basics

Survivor protection

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Terminally ill insured.

A viatical settlement is arranged between a viatical company and a/an

Change any incorrect statement on the application by personally initialing next to the corrected statement.

All of the following are duties and responsibilities of producers at the time of application except

National origin

All of the following are factors that an underwriter could use to select and classify risk EXCEPT

The plan is funded by permanent insurance only

All of the following are true of the key person insurance EXCEPT

Education

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT

Lower premiums than a person who receives a standard risk.

An applicant who receives a preferred risk classification qualifies for

5 years

An individual insurance agent may operate as a viatical settlement broker without obtaining a separate license if the viatical settlement broker activities are incidental to the agent's business transactions, and if the agent has been licensed for life insurance for at least what time period?

Industrial life

An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have?

Ordinary life

An insured purchased an individual life insurance policy with a face amount of $15,000. He pays a premium each month. What type of policy is that?

Variable

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month that it was last month. What type of policy does the insured have?

Viatical settlement

An insured with a life insurance policy is diagnosed with a terminal illness. Which of the following could be a suitable option for this insured?

It is used to lower premiums

An insurer invests the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments?

Obtain a list of all life insurance policies that will be replaced

During replacement of life insurance a replacing insurer must do which of the following?

Whether an insurable interest exists between the individuals.

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about

Permanent

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?

It will likely be higher because the applicant is a substandard risk.

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?

Premium

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a

Insurable interest

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

A presentation of nonguaranteed elements of a policy

The term "illustration" in a life insurance policy refers to

Cash values can be borrowed at any time

What does liquidity refer to in a life insurance policy?

Absolute assignment is given to the viatical settlement company

When a viator sells a life insurance policy

Their premiums are lower

Which is generally true regarding insureds who have been classified as preferred risks?

Application

Which is the primary source of information used for insurance underwriting?

An applicant who is a smoker.

Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination?

Net premium plus expenses

Which of the following best describes gross annual premium?

A policy summary

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

Policyowner

Which of the following individuals must have insurable interest in the insured?

The cash value available to the policyowner

Which of the following is an example of liquidity in a life insurance contract?

Human life value approach

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

Buy-sell agreements are normally funded with a life insurance policy.

Which of the following statements concerning buy-sell agreements is true?

A debtor has an insurable interest in the life of a lender.

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?

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?

Insurers are barred from requesting HIV testing

Which of the following statements regarding HIV testing for life insurance purposes is NOT true?

Viatical settlement provider

Which of the following terms is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract?

Whole life

Which of the following types of insurance policies would perform the function of cash accumulation?

Substandard risk

Which of the following types of risk will result in the highest premium?

To create an estate

Which one of the following is the best reason to purchase life insurance rather than annuities?

The employer is the owner and beneficiary.

Who is the owner and who is the beneficiary on a Key Person Life Insurance?

Insurers

Who makes up the Medical Information Bureau?

Superintendent

Who must approve viatical settlements?