Life Insurance - Basics

The term "illustration" in a life insurance policy refers to A. A presentation for nonguaranteed elements of a policy. B. A depiction of policy benefits and guarantees. C. Pictures accompanying a policy. D. Charts and graphs.

CORRECT: A. A presentation for nonguaranteed elements of a policy.

Who makes the Medical Information Bureau?

Insurers The companies can compare the information they have collected on a potential insured with information other insurers may have discovered.

Regarding the taxation of Business Overhead policies,

Premiums are deductible, benefits are taxed.

In the event of a loss, business overhead insurance will pay for

Rent Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while the are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their ongoing business expenses, such as rent.

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

The cash value available to the policyowner

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

The employer is the owner and beneficiary

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

5 days

Which of the following is true regarding written binders? A. Binder proved that the insured has insurance coverage, and even though the policy has not been issued yet. B. Binders apply only to Life Insurance. C. Both the applicant and insurer can write a binder. D. Binders serve as a receipt that the insurer is processing the application. No coverage applies.

CORRECT: A. Binder proved that the insured has insurance coverage, and even though the policy has not been issued yet.

All of the following are personal uses of life insurance EXCEPT A. Buy-sell agreement. B. Survivor protection. C. Estate creation. D. Cash accumulation.

CORRECT: A. Buy-sell agreement

Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following EXCEPT A. The Free-Look Period. B. The Right of Rescission. C. The Grace Period. D. The Incontestability Period.

CORRECT: C. The Grace Period

A life insurance policy can be delivered by all of the following means, EXCEPT A. First class mail with a delivery receipt. B. Personal delivery by a trained employee of the insurer, with delivery receipt. C. Certified mail. D. Priority mail.

CORRECT: D. Priority mail

What does "liquidity" refer to in life insurance policy?

Cash values can be borrowed at any time