Life Insurance Chapter 2: pt. 2
Which of the following is not an example of insurable interest?
Debtor in creditor
Credit Life insurance
Insurer the life of the debtor
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance polices that will be replaced
What kind of policy issues certificates of Insurance to insureds?
Group Insurance
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy
An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. IF the customer replies yes, which of the following best describes the agent's next step?
The agent must provide a replacement notice to the applicant
All of the following are true of key person insurance except:
The plan is funded by permanent insurance only
What is the purpose of the buyer's guide?
To allow the consumer to compare the costs of different policies
Which of the following is not required for a producer to tell a prospect?
What requirements the producer needed to meet to obtain the insurance license
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
an unfair trade practice
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?
Inspection report
Who makes up the Medical Information Bureau?
Insurers
which of the following best describes the MIB
It is a non profit organization that maintains underwriting information on applicants fro life and health insurance
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of the issuance of the policy.
An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step:
The agent must provide a replacement notice to the applicant
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
The cost of coverage is a deductible expense by the employer
when replacing a policy, how long must an insurer maintain the documents related to the replacement?
3 years
At times, it is possible for a life insurance agent to affect a savings of premium rates by backdating an application for life insurance. What is the max amount of time that an application may be backdated?
6 months
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by
A paramedic or examining physician at the insurer's expense
Partners in business may financially buy interest of the deceased partner with
Any form of life insurance
All of the following are personal uses of life insurance EXCEPT
Buy sell agreement
All of the following are duties and responsibilities of producers at the time of application except:
Change incorrect statement on the application by personally initialing next to the corrected statement
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
What is the purpose of a conditional receipt
It is intended to provide coverage on a date prior to the policy issue
In modified life policies, what happens to the premium?
It is level at the beginning and increases after the first few years
Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?
Premiums are not tax deductible as a business expense
The term "illustration" in a life insurance policy refers to
A presentation of non guaranteed elements of a policy
which of the following entities protects policy owners, insured, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment
Insurance Guaranty Association
Upon policy delivery, the producer may be required to obtain any of the following except:
Signed waiver of premium
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. IF the policy is issued, what would be the policy's effective date?
The date of the medical exam
For how many years is an insurer required to maintain a complete file of it's advertisements
4 yrs.
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
When must insurable interest exist in a life insurance policy?
At the time of application
In terms of social security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits
Blackout Period
What is the time period called during which the surviving spouse of the insured does not receive social security income benefits
Blackout period
All of the following are personal uses of life insurance except:
Buy-sell agreement
How are state Insurance Guaranty Associations funded?
By their members - authorised insurers
all of the following are factors that an underwriter could use to select and classify risk except:
National origin
An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information?
Present the insured with a disclosure authorisation notice
An employer quits his job on May 15 and doesn't convert his group life insurance policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary
An applicant who receives a preferred risk classification qualifies for
Lower premiums than a person who receive a standard risk