Life Insurance Basics
The term "illustration" in a life insurance policy refers to
A presentation of non guaranteed elements of a policy.
What best describes gross annual premium?
Net premium plus expenses. Gross annual premium is net premium plus expenses (loading)
Insurance producer must ensure that contracts they recommend are in the best interest of the insured. This is called
Suitability. Insurance producers must adhere to the concept of suitability be ensuring that, to the best of their belief, the purchase, sale or exchange of a policy is in the best interest of the insured.
The following statements are true concerning the use of life insurance as an executive bonus are correct:
Any type of insurance policy may be used, the employer pays a bonus to a selected employee to fund the policy, and it is considered a non-qualified employee benefit.
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor protection. Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in event of the insured's death. This is known as survivor protection.
The three recognized areas in which insurable interest exist are as follows:
a policyowner insuring their own life, the life of a family member (relative or spouse), or the life of a business partner, key employee, or someone who has a financial obligation to the policyowner. A debtor does not have an insurable interest in the creditor.
In a survivorship life policy, when does the insurer pay the death benefit?
Survivorship life pays on the last death rather than upon the first death.
For what reason may a life insurace producer backdate a life insurance policy?
To avoid an increase in premium rate for the insured.
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free. S
An individual appled for an insurance policy and paid the initial premium. the insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of medical exam - If the company acknowledge receipt of the premium with a conditional reciept, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.
If aninsurer issued a policy based on the application that had unanswered questions, what would be true?
The policy will be interpreted as if the insurer waived its right to have an answer to the application. Any unanswered questions need to be answered before the policy is issued, If a policy is issued with questions unanswered, the contract will be interpreted as if the insurer waived its right to have an answer for the question, and will not be able to deny coverage later because of unanswered questions.