AD Banker Chapter 2 Quiz

All of the following are true regarding an Attending Physician's Statement (APS), except:

An MIB report can be used in place of an APS

Which of the following best describes a Statement of Good Health?

It verifies that the insured has not suffered a serious illness or injury requiring surgery or hospitalization since the application date

A generic brochure was developed by the ________ to assist prospective buyers of life insurance, which includes descriptions of all the basic types of life insurance and comparisons of their relative costs.

NAIC

When an individual qualifies for a lower premium or rate than standard risks, the insured is considered a:

Preferred Risk

A typical life insurance application contains how many parts?

2

Which of the following signatures would not be considered valid on an application for insurance?

A minor insured

If a medical exam is required as part of the underwriting process, who normally conducts the exam?

A physician or nurse

The person offering him/herself or another person to be insured by the contract best defines the:

Applicant

The person who submits an application for insurance is always referred to as the _______.

Applicant

The MIB is used in the underwriting of all of the following types of insurance, except:

Auto and Homeowners

By what means does the client acknowledge that an insurer may use services and information provided by third parties to gather information during the underwriting process?

By signing the application

Which of the following personal uses of life insurance is specifically designed to provide benefits to the policyowner while the insured is still alive?

Cash accumulation

A group plan is normally owned by any one of the following, except:

Debtors

Frieda wants coverage until she has paid back her business loan in 10 years. The ideal life insurance policy with the least expense would be:

Decreasing Term Life

Insurance covering the liability of a producer or agency is called _______.

Errors and Omissions

In a replacement transaction, the insurer that is having its policy replaced is known as the _______ insurer.

Existing

What is the difference between net premium and gross premium?

Expense Loading

The Do Not Call Registry and the Telemarketer Sales Rule were created by the _______.

Federal Trade Commission

The term 'mode' refers to the:

Frequency of premium payments

Applicants must consent to be tested and be informed that testing for ________ may determine insurability.

HIV

The Medical Information Bureau (MIB) is formed by

Insurance Companies

Martin is age 30 when he applies for life insurance. The underwriter classifies him the same as a person age 40 and his policy is issued with a premium for a person age 40. What substandard rating has been applied to Martin's policy?

Rated-Up Age

Which of the following is not a factor in premium determination?

Reserves

Once the gross amount of dollars required to fund an insured's needs has been determined using the needs analysis approach, what is the next step?

Subtract any assets available to fund financial needs after death

Which of the following receipts states that coverage will begin immediately for a specific length of time, regardless of whether the applicant is ultimately approved for coverage by the insurer?

Temporary insurance agreement

When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place?

The applicant is making an offer to the insurer

A producer provided a conditional receipt to an applicant who paid the first premium with the application. The applicant died before a policy was issued. If the insurer denies the claim, which party would have to prove the reasons for its actions if the claim was challenged?

The insurer

In determining the proper amount of life insurance, the Needs Analysis Approach takes into consideration all of the following factors, except:

The projected future value of services provided by the insured

What is the purpose of determining the proper amount of life insurance needed for a prospective client?

To prevent over and under insuring

When soliciting insurance, producers are governed by state rules and regulations under the title of ___________.

Unfair Trade Practices

Producer Andy is sent a newly issued policy by his insurer. Andy should now:

Visit the insured in person to deliver the policy

XYZ Insurer has decided to issue a policy to a particular applicant. What is the next step in this insurance transaction?

XYZ will send the policy to the producer for delivery to the insured

If a client chooses to pay premiums other than annually, what can he or she expect?

Additional charges to offset lost interest, earnings, and increased administrative costs

Which of the following is most likely to pay the highest premium for a disability income policy, all other factors being equal?

Age 40, welder, tobacco user

During the application process, a mistake is made by the applicant in answering one of the health questions and needs to be corrected. What is the best way to go about this?

Have the applicant initial the change or start over with a completely new application

The income-earning ability lost to dependents by the insured's premature death is a way to evaluate an individual's insurance needs. This method is known as the:

Human Life Value Approach

The cost of any required medical exams in the underwriting process is paid by the:

Insurer

Which of the following would be considered a good result from an underwriter's action when an individual Life Insurance Policy is issued as applied for?

Issued standard

Medical exams are requested in all of the following situations, except:

Low amount of premium

Part 1 of the application consists of all of the following information, except:

Medical status of immediate family members, their ages and causes of death

A (an)_________ is used when the insured's age, medical history, or amount of coverage does not require a medical exam for underwriting purposes.

Nonmedical Application

If after a policy has been issued and delivered, the insurer discovers unanswered questions on the application, what can the insurer legally do at this point?

Nothing, the insurer has waived its right to that information

If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a:

Notice of Replacement

Which of the following types of life insurance provides the largest portion of all coverage in force?

Ordinary

In order to receive a policy dividend, the policyowner must own a __________ policy.

Participating

Normally, when the insurer determines that the insured is an acceptable risk, the insurer will send the policy to the ____________.

Producer

A young couple just starting out on a limited budget, but having a large need for life insurance coverage, most likely would be best suited for ________ life insurance:

Term