Insurance Basics

Death Benefit

the amount paid upon the death of the insured in a life insurance policy

A substandard risk compared to a standard risk would pay

A higher premium

Beneficiary

A person who recieved the benefits of an insurance policy

Estate

A persons net worth

The Medical information bureau (MIB) is

A source of medical information to alert insurers to adverse medical history.

Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches the retirement age. What is the period of time called during which the surviving spouse does not receive benefits?

Blackout period

All of the following are true of key person insurance insurance EXCEPT: A.) The employer is the owner, payor, and beneficiary of the policy B.) The key employee is the insured C.)The plan is funded by permanent insurance only D.)There is no limitation on the number of key employee plans to force at one time.

C.) The plan is funded by permanent insurance only.

If an applicant for insurance submits the application and pays the premium at the same time, the insurer must give which of the following to the applicant?

Conditional report

Which of the following premium payment modes would result in the highest overall premium for life insurance? A.) Annual B.) Semi-Annual C.) Quarterly D.) Monthly

D.) Monthly

Which of the following factors is NOT considered by an underwriter when determining the premium rates for the individual seeking insurance? A.) Age B.) Medical History C.) Gender D.) Race

D.) Race

All of the following may have an insurable interest in the insured EXCEPT A.) The spouse B.) Insured's Children C.) The employer D.) The Insured's close friend

D.) The insured's Close Friend

When must insurable interest exist in life insurance?

Date of Application

The approach to determining the amount of personal life insurance that an applicant needs that considers such factors as the cost associated with death, costs of educating children, and costs of housing is called the

Needs approach

An insured submits the full premium along with a completed application for life insurance. Once the policy is issued, when does the coverage begin?

On the date of the application

Lump-Sum

Payment of the entire benefit in one sum

If no reciept is issued at the time of application, a statement of good health is usually required at the time of

Policy Delivery

Liquidation

Selling assets in order to raise capital

Life insurance death benefits can be used to fund funeral and other expenses that could otherwise be difficult to fund with the loss of the insured's income. What is the term that is most closely associated with this?

Survivor Protection

Solvency

The ability to meet financial obligations (i.e. an insurance company maintains enough assets to pay claims)

Life insurance companies use mortality to predict

The life expectancy of the proposed insured

Which division of an insurance company is responsible for the selection, evaluation, and classification of risks?

Underwriting

Cash Value

equity amount accumulated in permanent life insurance. Value within the assets.