Policy Replacement - Section 7
The following concerning life settlements is are correct: To transact life settlements normally requires a life settlement broker license. A life settlement is the sale of an existing life policy covering an individual who is typically 65 years or older who has a limited life expectancy but not terminally ill. The provider is the person or entity who for a fee manages the acquisition of a life policy on behalf of a third party. except :
A life settlement broker is a person who for a fee negotiates the purchase of a life policy between the policyowner and the buyer. - A life settlement broker represents the policyowner who is the seller of the policy, not the purchaser.
All of the following are true statements: Clients over age 60 have 30 days of a free look. Clients under the age of 60 have at least 10 days of a free look. Clients under the age of 60 have 30 days of a free look for replacements. Except:
Clients under the age of 60 have at least 10 days for a free look on term conversions. This rule does not apply to term conversions or credit life policies.
All of the following items would appear on the first page of a life policy : Term of the policy. Amount of coverage. Premium payment period. Except:
Cost of insurance. -Cost of insurance is not a requirement but the annual premium is. Cost of insurance is just one part of the total premium payment.
The following would be considered a replacement? Customer wants to have his existing policy benefits reduced, and add a term policy. Customer wants you to write a new term policy under which his monthly premium will be less. You write the customer another policy in addition to his current one, which he stops paying 2 months later. Except:
Customer cancelled a policy 3 months ago and now decides he wants a new policy.
The premium for a variable annuity may only be invested in all of the following during the free look period: Fixed income funds. Money market funds. High risk funds that is specifically requested by the investor. Except:
Individual stocks and bonds from low risk companies.
Which is correct about the "notice regarding replacement of Life Insurance" that agents are required to deliver to life insurance applicants?
It must be signed prior to taking an application. The notice of replacement form is to be signed by the applicant and the agent prior to taking an application. The applicant keeps their copy and the agent submits a copy along with the application to the replacing insurer.
What is the name of the second part of a life insurance application?
Medical Information.
Within the life insurance policy summary, all the following must be listed: Name and address of the insurance company. Cash values at the end of each year for the first 5 years. Premiums to be paid each year for the first 5 years. Except:
Name of the insured and the beneficiaries.
All of the following would be contained on the first page of the policy: How much coverage is purchased. Amount of the annual premium. Incorrect AnswerType of policy. except :
Name, age, gender and SS# of the insured. The social security number would not be on the first page of a life policy.
The type of life insurance that does not require a medical exam and asks only very basic health-related questions on the application is called:
Non-medical issue. A non-medical issued insurance policy required no medical exam and only asks very basic health-related questions on the application. Usually this type of insurance is only available in low face amounts or issued to younger ages, to reduce the risk of adverse selection against the company.
Identify that which constitutes the "entire contract" in a life insurance policy:
Policy, application, riders and any modifications. It provides that the policy itself and a copy of the application (Part I and Part II of app), if a copy is attached to the policy, riders, and any amendments legally constitute the entire contract between the parties.
An agent sells a life policy to a 60 year old client. Which of the following is true regarding a full refund
Policyowner may return the policy within 1 day.
Prior to the signing of a life settlement contract by all parties the broker shall provide the policyowner and the insured the following disclosures in writing? Any affiliation or contractual arrangements the broker may have with the person making the offer to purchase the life policy. A full, complete, and accurate description of all offers, counteroffers, acceptances and rejections relating to the proposed life settlement. All estimates of the insured's life expectancies that were obtained by the licensee in connection with the life settlement. except:
That the policyowner has 3 days to rescind the contract once the money is received for the sale of the policy.
The section of the life application that contains information about health of the applicant`s relatives is:
The Medical Information section.
The interest adjusted cost method differs from the traditional net cost method of comparing the costs of life insurance in that the former takes into account:
The time value of money.
In the life insurance industry, the __________ is the standard life insurance policy.
There are no standard life policies.
Which one of the following Life Policies is the Standard Life Policy for the life insurance industry?
There is no standard life policy. Unlike fire and casualty policies, there are NO standard life insurance policies.
The purpose of laws regarding the replacement of life and annuity contracts includes all of the following: To reduce the opportunity for misrepresentation and incomplete disclosures. To establish penalties for failure to comply with replacement requirements. To ensure the purchaser receives adequate information to make an informed decision. Except:
To protect the interests of life insurers and their agents. The main purpose of the replacement laws is to protect the consumer.
Any insurance company that violates the replacement laws may be fined:
The first fine is $10,000; thereafter the penalty is $30,000 to $300,000.
An agent must submit all of the following to the insurer: A signed copy of any illustration used in the presentation. The application listing any and all policies to be replaced by insurer and policy number. A copy of the signed replacement notice, if replacement is involved Except :
A copy of all printed communications used for the presentation. The insurer does not need a copy of the presentation materials.
the following, are required to be in insurance product illustrations? The page number. The name of the insured and insurer. The page number showing its relationship to the total number of pages in the illustration. Except:
A statement that the benefits in the illustration are guaranteed.
Whose signature is required on the application?
Applicant and the agent.
Who are parties to the life insurance contract?
Applicant and the insurer. he parties to a life insurance police are the applicant and the insurance company. The beneficiary and the agent are not parties to the contrac
The premium for a variable annuity may be invested in any of the following during the free look period: The aggressive mutual funds of the underlying annuity contract at the investors request. Fixed-income investments. Money market funds
Balanced funds.
All of the following relationships normally indicate the presence of insurable interest: An employee insuring the life of his employer to provide funding for a business purchase agreement. A wife insuring the life of her husband. An individual insuring her own life Except :
Bank insuring the life of a customer in the amount of his savings account balance. The lender has an insurable interest in a borrower not a saver.
All of the following relationships present an example of insurable interest: An employee insuring the life of his employer to provide funding for a business purchase agreemA college student insuring the life of the person responsible for their tuition Incorrect AnswerAn employer insuring the life of the company office managerent. Except :
Bank insuring the life of a customer in the amount of their savings account balance. This statement is FALSE. The life of a borrower can be insured for the loan balance but not for their checking or saving account balance. Keywords - insurable interest, except: Means which is FALSE
With regards to life insurance, insurable interest is not a requirement for a
Beneficiary. Insurable interest is not a requirement for a beneficiary, as they are just the ones who receive the proceeds in the event that the insured dies. Since the beneficiary isn't the one being insured, he/she does not have to show insurable interest for the policy to be purchased.
A temporary insurance agreement is another term for a _________.
Binding Receipt. A temporary insurance agreement is another term for a binding receipt.
What must be received by the proposed insured no later than policy delivery?
Buyers guide and policy summary.
Model state law of the N,A,I,C, requires that two interest adjusted cost indices must be illustrated within each life insurance policy issued:
Net payment index and surrender cost index.
The following is correct concerning a life insurance application:
Part I of the application contains questions concerning driving record, hobbies, and past and present life insurance. Rationale - Part I contains general information, past and present life insurance, driving record, foreign travel, and hobbies.
At the time of application, life settlement licensees are required to provide the following disclosures in writing that must be signed by the policyowner: That there are alternatives to life settlements such as accelerated benefits. To seek advice from a tax advisor as some or all the proceeds may be taxable. The insured may be contacted to determine their health status every three months. Except;
That their consent to obtain their personal information needed to complete the transaction and it may be provided to the person who buys the policy or provides the funds for the original purchase. Rationale - The disclosure also states that the insured may be asked to renew their permission to share their personal information every two years.
All the following statements are true of replacements: Applicant must receive the original or a copy of all printed communications used for presentation. A Notice Regarding Replacement of Life Insurance must be presented at the time of application. The client has 30 days to look over the policy and decide if he/she wants to keep it. Except:
The information and evidence must be retained for at least 24 months. The information and evidence must be retained for no less than 3 years.
Which of the following describes a standard life policy?
There is no such thing as a standard life policy.