Life Insurance Test Review

What individuals could legally receive commissions from the sale of a life insurance policy?

A licensed life insurance agent To receive commissions, agents must be licensed in the line of insurance being sold.

The term fully insured refers to someone who has earned 40 quarters of coverage (the equivalent of 10 years of work), and is therefore entitled to receive Social Security retirement, Medicare, and survivor benefits. The waiting or elimination period for Social Security disability benefits is 5 months.

All of the following are requirements of eligibility for Social Security disability income benefits. Fully insured status. Waiting period of 5 months. Inability to perform any gainful work.

the following statements about occupational vs. nonoccupational coverage is TRUE

All disability insurance can be written on either an occupational or nonoccupational basis.

Periodic payments of accumulated funds best describes

An annuity An annuity An annuity An annuity is a contract used to accumulate funds that are to be distributed at a specified time in the future as a periodic payment of accumulated funds.

When an annuity is written, whose life expectancy is taken into account?

Annuitant The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.

Which of the following best describes annually renewable term insurance

It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

It is only taxable if the cash value exceeds the amount paid for premiums. The cash value of a surrendered policy is only considered to be taxable as income if the cash value exceeds the amount of premiums paid for the policy.

Whose responsibility is it to determine if all of the questions on an application have been answered?

It is the responsibility of the agent to make sure that the application has been properly signed and that all questions have been answered correctly.

An insurer must acknowledge receipt of a Notice of Claim within how many days?

15 days. Under state Claims Methods and Practices laws, every insurer, upon receiving a notification of a claim must acknowledge its receipt and begin an investigation within 15 working days.

Within how many years must an agent renew an insurance license?

2 An agent's license must be renewed every 2 years on their birthday in either even or odd numbered years depending on when the license was issued. As long as the renewal requirements are met, the license will continue in effect until refused, revoked or suspended by the Commissioner.

What is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?

25% During any calendar year, at least 25% of a licensee's total volume of premiums must be from business other than controlled business.

The Patient Protection and Affordable Care Act mandates that insurers provide coverage for dependent children up to age of

26 The law extends coverage for children to age 26 if the child is not eligible for other group coverage.

How long is an open enrollment period for Medicare supplement policies?

6 months

The classification "Small Employer" means any person that during the preceding year employed

At least 2 and not more than 50 persons. Classification rules established by the Insurance Code state that "Small Employer" means any person that during the preceding year employed at least 2 and not more than 50 persons

Which members of a corporation or partnership are required to obtain an individual insurance agent's license in order for the association to be licensed?

At least one officer or partner and any other person acting as an agent At least one officer of the corporation or one active partner of the partnership and all other persons performing any acts of an agent on behalf of the corporation or partnership in this state must be individually licensed separately from the corporation or partnership.

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's

Attained age

The accelerated benefits provision will provide for an early payment of the death benefit when the insured

Becomes terminally ill.

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?

Benefits will be coordinated when individuals are covered under two or more health plans.

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender Once the cash surrender value is paid, the contract is over.

When delivering a policy, what is an agent's responsibility?

Collect payment at time of delivery

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

Conditional

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional. The contract is formed on the basis that certain conditions are met.

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as what?

Consideration Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

When an individual obtains an insurance license for the primary purpose of writing insurance on him- or herself, or for members of his or her immediate family, or business, this is called

Controlled business. When producers sell policies on themselves, their family, or their coworkers, this is called "controlled business." In this state, at least 25% of a licensee's total volume of premiums in a calendar year must be from business other than controlled business.

What are characteristics of group health insurance or master contract?

Dependents of insureds can be covered under group health plans. Also group coverage may be converted to individual coverage if the group contract is ended. Also the actual policy, called the "master contract", is issued to the group sponsor only; the individuals covered under the policy are issued certificates of insurance as proof that they are covered under the master contract. Dependents are covered under group plans. If the group contract is terminated, insureds may convert to individual policies without having to provide proof of insurability.

Regarding beneficiary designations: The beneficiary must have insurable interest in the insured. True or False?

False A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have to have an insurable interest in the policyholder.

With taxation of Modified Endowment Contracts withdrawals are not taxable. True or False?

False.

Policy backdating is a mandatory life insurance policy provision. True or False?

False. Policy backdating is not a mandatory provision; in fact, backdating a policy more than 6 months is prohibited. Misstatement of age. Incontestability. Grace period. These are all mandatory.

Regarding a licensing requirement for a corporation in the state of Texas: The business must be able to pay up to $50,000 in the event that it is proven to be negligent. True or False?

False. The business must demonstrate financial responsibility to provide coverage for an error or omission. The business must be a Texas corporation, with its principal place of business in Texas. At least one officer of the corporation must be individually licensed as an agent. All of the above criteria are true, with the exception of the amount of money a business can afford to lose, in the event that it is proven to be negligent. A business only needs to be able to pay $25,000.

The cost the company is paying for monthly premiums is included in a certificate of insurance. True or False?

False. The individuals covered under the insurance contract are issued certificates of insurance. The certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy.

The basic information about supplementary policies is required to be stated in the outline of coverage provided with a long-term care policy. True or False.

False. The outline of coverage must follow the standard format included in the insurance regulations. It must provide information about the insurance company, the policy number, important features of the policy, and explain the right to return the policy for a refund.

When possible, what should insurers strive to eliminate from illustrations?

Footnotes and caveats Insurers will, as often as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

Annually renewable term policies provide a level death benefit for a premium that

Increases annually. Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of

Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes

Misrepresentation. Making false or misleading statements with the intent to defraud another is misrepresentation.

Who can request changes in premium payments, face value, loans, and policy plans?

Policy owner

Insurers may change _______________ on a guaranteed renewable health insurance policy?

Rates by class. On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.

Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as

Rebating. Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

Revocable beneficiary. The policyowner may change a revocable designation at any time and without the consent of the beneficiary. Irrevocable beneficiaries, on the other hand, have a vested interest in the policy, so the policyowner may not be able to exercise certain rights without their consent

An insured has endured multiple surgeries and hospitalizations for an illness during the summer months. Her insurer no longer bills her for medical expenses. What term best describes the condition she has met?

Stop-Loss Limit A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses

Regarding credit life insurance: The Creditor is the policyowner. True or False?

TRUE. In credit life insurance, the creditor is the policyowner and the beneficiary; the debtor is the insured.

An advertisement must accurately represent what?

The insurer's assets The insurer's corporate structure The insurer's financial standing An advertisement shall not contain untrue or misleading statements regarding the insurer's assets, corporate structure, financial standing, age, or position in the insurance business.

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen

The policy will not be affected. In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud

The free look provision allows the insured to return the policy within 10 days for a full refund of premiums if dissatisfied for any reason. True or False?

True. Free look is a mandatory provision found in all life/health policies that allows the insured to return the policy within a specified number of days and receive a full refund of premium if dissatisfied with the policy for any reason.

The unfair trade practice called defamation is making derogatory oral statements about another insurer's financial condition. True or False?

True. Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

Usual, customary and reasonable. The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium rider waives the premium if the insured owner has been totally disabled for a predetermined period. The payor benefit provides for an owner other than the insured and the waiver of cost of insurance is found in Universal Life.

Which rider is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

Substitute insured rider

Regarding group life insurance: 100% participation of members is required in noncontributory plans True or False?

True. If the employer pays all of the premium, then all employees must be included.

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?

15 days. A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.

Group health insurance is characterized by all of the following

A master contract. Lower administrative costs. Conversion privilege. If an insurer issues a group health insurance policy, they must cover everyone in the group under the master contract. Group underwriting process is designed to avoid adverse selection.

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

Critical Illness

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require the conditions. True or False?

False. Conditions are part of the policy structure. Consideration is an essential part of a contract.

Which of the following is called a "second-to-die" policy?

Survivorship Life - Survivorship life (also referred to as "second-to-die" or "last survivor" policy) is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age.

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?

The Applicant It is required by law that an insurer inform the applicant of all sources that will be contacted in determining the applicant's insurability, in addition to how the information will be gathered.

The expense for an autopsy covered under the physical exam and autopsy provision is paid by

The insurer. Where not forbidden by state law, the insurer, at its own expense, may cause an autopsy to be performed on a deceased insured.

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the

The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.

What is the purpose of a fixed-period settlement option?

To provide a guaranteed income for a certain amount of time

A policy assignement transfers rights of ownership from the owner to another person. True or False?

True

True or False?: Regarding an irrevocable beneficiary: It can be changed only with the written consent of that beneficiary.

True Once an irrevocable beneficiary is shown for the policy, it requires his or her written consent to change.

For coninsurance, The larger the percentage that is paid by the insured, the lower the required premium will be. True or False?

True. After the insured satisfies the policy deductible, the insurance company will usually pay the majority of the expenses--typically 80%--with the insured paying the remaining 20%. Other coinsurance arrangements exist, such as 90%/10%; 75%/25%; or 50%/50%. When the insured retains a larger share of the risk, they will pay a lower premium.

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800 In this scenario, the death occurred within the mandatory 30-day grace period. Past due premium would be subtracted from the face amount of the policy.

If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?

0%

A 63-year-old man is planning to be employed until age 68. When will he be eligible for Medicare?

Age 65, regardless of his employment status The individual will still be eligible for Medicare at age 65, but if he is still insured under his employer's group health plan, the group plan will be his primary coverage and Medicare will be secondary coverage.

Long-term care policies MUST cover

Alzheimer's disease.

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer Report

In a relative value system of determining coverage for a given procedure, what term describes the total amount payable per point?

Conversion factor In order to determine the amount payable for a given procedure, the assigned points (relative value) of 200 are multiplied by a conversion factor. This conversion factor represents the total amount payable per point. For example, if the conversion factor is $10 and the point value is 200, the policy would pay $2,000 for the procedure (200 x 10

A key person insurance policy can pay for what?

Costs of training a replacement

This arrangement specifies who will purchase a disabled partner's interest in the event he or she becomes disabled.

Disability buyout The disability buyout agreement specifies who will purchase a disabled partner's interest and legally obligates that person or party to purchase such interest upon disability.

A typical Accidental Death & Dismemberment policy covers loss of income. True or False.

False. Accidental Death & Dismemberment policies cover loss of body parts or life only.

Who must pay for the cost of a medical examination required in the process of underwriting

Insurer

Which of the following is an example of a limited-pay life policy?

Life Paid-up at Age 65 Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity.

Your client wants both protection and savings from the insurance and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

What is the other term for the cash payment settlement option?

Lump sum Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.

The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as

Subrogation

Which of the following statements is true regarding coinsurance?

The larger the percentage that is paid by the insured, the lower the required premium will be. After the insured satisfies the policy deductible, the insurance company will usually pay the majority of the expenses--typically 80%--with the insured paying the remaining 20%. Other coinsurance arrangements exist, such as 90%/10%; 75%/25%; or 50%/50%. When the insured retains a larger share of the risk, they will pay a lower premium.

Which of the following definitions would make it easier to qualify for total disability benefits?

The more liberal "own occupation" Total disability is defined differently under some disability income policies. The more liberal "own occupation" definition of disability makes it easier to qualify for benefits.

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's

The premium charged for the increase will be based upon the attained age of the insured.

How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state?

12 months Long-term care policies, which can be marketed in the form of individual policies, group policies, or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility. They must provide coverage for at least 12 consecutive months in a setting other than an acute care unit of a hospital.

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years. The incontestability clause prevents an insurer from denying a claim due to statements in the application after the policy has been in force for 2 years, even if there has been a material misstatement of facts or concealment of a material fact.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within

90 Days of loss

An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change?

Applicant

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?

No tax. Disability income benefits, including those for medical expense and LTC policies, are received income tax free by the individual

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution.

An insured notifies the insurance company that he has become disabled. What provision states that claims must be paid immediately upon written proof of loss?

Time of Payment of Claims The Time of Payment of Claims provision specifies that claims are to be paid immediately upon written proof of loss.

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies. The buyer's guide provides generic information about life insurance policies and allows the consumer to compare the costs of different policies. The policy summary provides specific information about the issued policy, as well as the insurer's information.

What is the purpose of coinsurance provisions?

To help the insurance company to prevent overutilization of the policy. The purpose of the coinsurance provision is for the insurance company to control costs and discourage overutilization of the policy.

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending?

Unlimited

In disability income insurance, the time between the onset of an injury or sickness and when benefits begin is known as the

Elimination period.

The HMO Act of 1973 required employers to offer an HMO plan as an alternative to regular health plans if the company had more than 25 employees. How has this plan since changed?

Employers are no longer forced to offer HMO plans.

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is th

Insuring clause. The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.

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.

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. Coverage commences on the date of the application or the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

A domestic insurer issuing variable contracts must establish one or more

Separate accounts. Any domestic insurer issuing variable contracts must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account.

All of the following are true regarding the guaranteed insurability rider The insured may purchase additional coverage at the attained age. The insured may purchase additional insurance up to the amount specified in the base policy. It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events.

The guaranteed insurability rider may be structured to allow for specific additional amounts of insurance to be purchased at specific ages, dates and events without proving insurability; however, the coverage is purchased at the insured's attained age and the maximum allowable purchase is specified in the base policy. This rider usually expires at the insured's age 40.

An agent is in the process of replacing the insured's current health insurance policy with a new one. What would be a proper action?

The old policy should stay in force until the new policy is issued. The agent must make sure that the current policy is not cancelled before the new policy is issued.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy. Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.

Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray?

50/50 After the deductible has been paid, the insurance company will pay a specified amount for a physician's visit, while the insured pays the remaining percentage. This is called "coinsurance". Plans will often be listed in a fraction format, with the first number representing the amount that will be paid by the insurer. The less the insurer must pay with coinsurance payments, the lower the premiums will be. Therefore, Ray should choose the 50/50 plan.

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?

Business overhead expense policy Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. Expenses such as rent, utilities, and employee salaries are covered.

A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a

Buy-sell agreement. Buy-Sell agreements are used to contractually establish the intent of someone else to purchase the business upon the insured's death, and to set a value (purchase price) on a business. Life insurance is used to fund the buy-sell agreement. Any type of life insurance may be purchased to provide the necessary funds for the agreement. Insurance can be used to either fully or partially fund the buy-sell agreement.

aleatory nature of an insurance contract =

Exchange of unequal values, An aleatory contract is a contract in which unequal amounts or values are exchanged. The amount of premium the insured pays is much less than the potential loss assumed by the insurer.

An agent selling variable annuities must be registered with

FINRA. Because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities.

COBRA requires all employers, regardless of the number or age of employees, to provide extended group health coverage. True or False?

False

The Insuring Clause specify a list of available doctors. True or False?

False. It does specify: Covered perils The insurance company The name of the insured The Insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated.

Regarding the cancellation of an individual insurance policy: Unearned premiums are retained by the insurance company. True or False?

False. This rider allows the insurer to cancel the policy at any time, or at the end of the policy period. Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis. These statements are true: The insurer must provide the insured a written notice of the cancellation. Claims incurred before cancellation must be honored. An insurance company may cancel the policy at any time.

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider A single rider that provides coverage on every family member is called a "family rider".

All the following are features of a guaranteed renewable provision?

Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

Incontestability clause. If an insurer wishes to contest any statements on an application, they must do so within the first two years.

How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in Texas?

Long-term care policies, which can be marketed in the form of individual policies, group policies, or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility. They must provide coverage for at least 12 consecutive months in a setting other than an acute care unit of a hospital.

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?

Offer the supplement policy on a guaranteed issue basis Once a person becomes eligible for Medicare supplement plans, and during the open enrollment period, coverage must be offered on a guaranteed issue basis.

An insured purchases a policy in 2008 and died in 2013. The insurance company discovers at that time that the insured concealed information during the application process. What can they do?

Pay the death benefit The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.

Whta provision is mandatory for health insurance policies?

Physical examination and autopsy Physical examination and autopsy is a mandatory provision required by law. The other answer choices are optional provisions.

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

Policyowner Only the policyowner has the ownership rights under the policy, and not the insured or the beneficiary.

What determines the amount of each installment paid in a Life Income Option arrangement?

Recipient's life expectancy and amount of principal

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 they 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 other ongoing business expenses, such as rent.

Which of the following would provide an underwriter with information concerning an applicant's health history?

The Medical Information Bureau An agent's report and inspection report provides personal information. Medical exams provide information on current health. Only the MIB will provide information about an applicant's medical history.

the following is true about the requirements regarding HIV exams?

The applicant must give prior informed written consent. A separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters, but not agents.

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?

The benefits will be coordinated. Benefits will be coordinated when individuals are covered under two or more health plans.

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

The cash value of a surrendered policy is only considered to be taxable as income if the cash value exceeds the amount of premiums paid for the policy

Regarding elimination periods and the cost of coverage: The longer the elimination period, the lower the cost of coverage. True or False?

True. The "elimination period" is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable. The longer the elimination period is, the lower the cost of coverage will be.

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

Whether an insurable interest exists between the individuals. An insurable interest must exist at the time the policy is issued. Some relationships are automatically presumed to qualify as an insurable interest, e.g., spouses, parents, children and certain business relationships.

What protects consumers against the circulation of inaccurate or obsolete personal or financial information?

he Fair Credit Reporting Act