2-15 Chapter 2

What is a blackout period for social security benefits?

A period of time during which the surviving spouse does not receive benefits

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?

Application date or exam date, whichever occurs last

When does insurable interest need to exist in a life insurance policy?

At the time of application

What does "liquidity" mean in a life insurance policy?

Availability of cash value

When planning for survivor protection in life insurance, what needs to be considered?

Current assets, liabilities, and survivor's needs

What happens to the premium when the payment plan is changed from monthly to annually?

Decreases

Life insurance may be used to pay state inheritance taxes and federal estates taxes eliminating the need to sell assets from the estate. What is this called?

Estate conservation

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?

Existence of insurable interest

What type of policy issues certificates of insurance to the insureds?

Group

Mortality tables are used by insurance companies to predict what?

Life expectancy and death rates

What type of insurance would perform the function of cash accumulation?

Life insurance

What is the purpose of key person insurance?

Minimize risk of financial loss caused by the death of a key employee

What document must a producer provide the insured during a policy replacement?

Notice regarding replacement

What are the three main instances when insurable interest exists in life insurance?

Own life, Family, business partner, or someone who has a financial obligation to you

If someone wants to buy a life insurance policy that will provide a lifetime protection against premature death, what type of life insurance policy should it be?

Permanent

What type of life insurance offers an applicant a cash value element?

Permanent insurance

What document describes the specific information about a policy?

Policy summary?

Who must have insurable interest in the insured?

Policyowner

In calculating the amount of life insurance needed, what is the needs approach based on?

Predicted needs of a family after the premature death of the insured

What is the term that describes the frequency and the amount of the premium payment?

Premium mode

What are illustrations in a life insurance policy?

Presentations of non-guaranteed elements of the policy

What is insurance underwriting?

Process of risk selection and classification

What is the main responsibility of a company's underwriting unit?

Risk selection

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity

A business is the owner and beneficiary of a key-person life policy. When the business collects the policy benefit, how is it taxed?

Tax free

What is the main purpose of the regulation on life insurance policy illustrations?

To help the public make educated decisions about buying life insurance

What is the purpose of the agent's report during the application process?

To record personal observations about the proposed insured

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

What are the three factors that determine premium for a particular life insurance policy?

mortality, interest, and expense

What term describes the fee a person pays an insurance company to receive coverage?

premium