study guide part 4

What is the maximum amount that the Alabama Life and Disability Insurance Guaranty Association will pay in benefits for one life?

300,000

Which of the following is the required number of participants in a contributory group plan?

75%

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

Which of the following events could result in the revocation or suspension of a business entity's insurance license?

A principal or manager of the business is in violation of Alabama insurance laws and the business entity, while aware of the violation, does not report the violation to the Commissioner.

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory

Which of the following is TRUE about a class designation

Beneficiaries are not identified by name.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a

Convertible Term Policy

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Executive bonus.

The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called

Expenses

If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is

Fully insured.

What provision in an insurance policy extends coverage beyond the premium due date?

Grace period

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases.

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and Current.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue.

Which of the following statements is TRUE concerning whole life insurance?

Lump-sum death benefits are not taxable.

What is the official name for the Social Security program?

Old Age Survivors Disability Insurance

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT

Other insurance coverages.

The term "fiduciary capacity" deals with a producer's

Position of financial trust.

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

Reduction of premium

Which type of life insurance policy generates immediate cash value?

Single Premium

Which of the following types of risk will result in the highest premium?

Substandard risk

Which of the following entities established the Do-Not-Call Registry?

The Federal Trade Commission

An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this?

The Medical Information Bureau

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

The type of investment.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. The insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilize?

Viatical settlement

An insurance company receives an application with some information missing and issues the policy anyway. What is this called?

Waiver