New York Life- Life Chapter 2

Buy-sell agreement

A legal contract the determines what will be done with a business in the event that an owner dies or becomes disabled. This is also referred to as a business continuation agreement.

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.

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 come effective?

As of the application date

When must the Buyer's Guide be delivered to the proposed inured?

At the time of application

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?

Attending Physician statement

What is the time period called during which the surviving spouse does not receive Social Security income benefits?

Blackout period

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

Cash values can be borrowed at any time.

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.

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

Inspection report

Medical Information Bureau (MIB)

It is a nonprofit organization that maintains underwriting information on an applicants for life and health insurance.

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

It is used to lower premiums

Attempting how much insurance an individual wold require based upon their financial objectives as

Need Approach

Which of the following is correct concerning the taxation of premium in a key-life insurance policy?

Premiums are not tax deductible as a business expense.

Which of the following best details the underwriting process for life insurance?

Selection, classification, and rating of risks

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

Survivor protection

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

The plan is funded by permanent insurance only.

Which of the following CANNOT be included along with illustrations used to sell life insurance

Vanishing premium information

Business continuation plan

When the partners of a business develop an arrangement whereby should one of them die or become permanently disabled, the other partners would purchase the interest of the deceased or disabled partner at a predetermined price.

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 the insurable interest exists between the individuals.

When must the insurable interest exist in a life insurance policy?

at the time of application