Life insurance Basics

What is the number of credits required for fully insured status for social security disability benefits

40

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

the term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of policy.

Who must be a member of insurance guaranty associations?

All insurers authorized to write insurance within a state

When an insurer begins underwriting producers for an applicant, what will; be the primary source for its underwriting information?

Application

When must the policy summary for a life insurance policy be delivered to the policy owner?

At the time of policy delivery

A key person insurance policy can pay for which of the following?

Costs of training a replacement

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

Estate conservation

What is the purpose of a condition receipt?

Its intended to provide coverage on a date prior to the policy issue

Which of the following will be included ion a policy summary

Premium amounts and surrender values

When must insurable interest exist in a life insurance policy?

at the time of application.

If during the underwriting process an insurer obtains personal information about an applicant from the applicant, when must the insurer provide notice of its information practices?

at the time of policy delivery

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

it will Decrease

What is the purpose of the agents report during the application process?

the agents report discusses the agents personal observations about the proposed insured that may help in the underwriting process.

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

the benefit is received tax free

Who is the beneficiary on a key-person life insurance policy?

the employer

What is the purpose of insurance guaranty associations?

to protect policy owners, insured and beneficiaries from financial losses caused by insolvent insurers

How does the premium mode affect the total premium paid for insurance for the year?

Higher frequency of premium payments will result in higher overall premium

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

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

Permanent insurance (usually, whole life)

What document describes the specific information about a policy?

Policy summary

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

Premium

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 nonguaranteed elements of the policy

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

Risk selection

Which of the following best details the underwriting process for life insurance

Selection, classification and rating of risks

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

What are the personal uses of life insurance

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

Who is responsible for the consents of insurance advertisement

The insurance company

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

The predicted needs of a family after the premature death of the insured

What is insurance underwriting?

The process of risk selection and classification

What is the timeframe for filling relevant Suspicious Activity Reports?

Within 30 days of initial discovery

What does liquidity mean in a life insurance policy?

availability of cash value

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

either in the date of the application or the date of the medical exam (whichever occurs last)

Which of the following statements regarding HIV testing for life insurance purposes is NOT true?

Insurers are barred from requesting HIV testing

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

Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policy owner

What type of report provides information about the applicants hobbies, habits and financial status?

Investigative consumer report

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?

It will likely be higher because the application is a substandard disk

What type of insurance creates an immediate estate?

Life insurance

What is included in Part 2 of a life insurance application

Medical information about the prospective insured

All other factors being equal, which premium payments mode will require an overall higher premium; monthly or annual?

Monthly

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

Mortality, interest and expense

All of the following are factors that an underwriter could use to select and classify risk EXCEPT

National origin

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance

No, Advertising of the existence of the guaranty association for the purpose of solicitation and sale of insurance policies by insurers is and illegal business

Upon policy deliver, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium

A viatical settlement is arranged between a viatical company and a/an

Terminally ill insured

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

The existence of insurable interest between the applicant and the insured

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

The insured's current assets, liabilities and survivor's needs

Who must have insurable interest in the insured?

The policy owner

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application

What is the purpose of key person insurance

To minimize the risk of financial loss caused by the death of a key employee

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than?

With the policy