Life Insurance - Chapter 3: Life Insurance Basics

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

$2,500

These are true in regards to the needs approach method of determining the value of an individual's life

1. Coverage is based on the predicted needs of that family 2. The death of an insured must be premature 3. It must be assumed that the death of the insured will occur immediately

Using the needs approach, these info are needed to determine the value of someone's life

1. Outstanding debt 2. Mortgages 3. Expenses 4. Income

These are true in regards to Business Overhead Expense policies

1. Premiums paid for BOE are tax-deductible 2. Any benefits received are taxable to the business 3. Leased equipment expenses are covered by the plan

Upon policy delivery, the producer may be required to obtain

1. Statement of good health 2. Payment of premium 3. Delivery receipt

Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes

1. The right of rescission 2. Incontestability period 3. Free-look period

The following are true about life settlements

1. They involve insurance policies with large face amounts 2. They could be used for a key person coverage, corporate owned policies, or policies representing excess coverage that is no longer needed 3. They could be sold for an amount greater than the current cash value

Title page of the policy provides a summary of the benefits and coverages provided by the policy. Info included are

1. Type of policy 2. Amount of coverage provided 3. Premium amount and modal 4. The effective date and the termination date of the policy 5. Children being covered by a child rider

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of?

A STOLI policy (stranger-originated life insurance) = prohibited because of insurable interest

MIB is?

A non-profit organization that maintains underwriting information on applicants for life and health insurance

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

A presentation of non-guaranteed elements of a policy

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

A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called?

Business Overhead Expense

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

Executive is the owner and the executive pays the premium

A family's need for income is greatest during the

Family Dependency Period: the insured died leaving surviving spouse with dependent children to support

What must be disclosed in all advertisements and policies of term life insurance for individuals 55 years old or older?

Insurance monetary value index

Kayla's husband died in a plane crash. She needs a new source of funding that will help put her child through daycare. Which of the following would be the best source? a. estate conservation b. life insurance proceeds c. state education waiver d. viatical settlement

Life Insurance Proceeds

What is the term used when a person sells his assets as a way to gain money?

Liquidation

Which type of risk will result in the highest premium?

Substandard risk

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract

Under what circumstances would a life insurance contract qualify as a "standard policy?"

Under no circumstances. The California Insurance Code prohibits the creation of a "standard" Life insurance policy.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health