Life Insurance BAsics

Which of the following best describes the MIB? A It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. B It is a government agency that collects medical information on the insured from the insurance companies. C It is a member organization that protects insured against insolvent insurers. D It is a rating organization for health insurance.

A

What is the purpose of key person insurance? A To provide health insurance to the families of key employees B To insure retirement benefits are available to all key employees C To maintain an account that insures the owner of a company remains solvent D To lessen the risk of financial loss because of the death of a key employee

D

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A Business partners have an insurable interest in each other. B A husband or wife has an insurable interest in their spouse. C An individual has an insurable interest in his or her own life. D A debtor has an insurable interest in the life of a lender.

D

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 A Juvenile protection provision B Survivor protection C Life planning D Survivorship insurance

B

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? A Company is the owner, and the company pays the premium. B Executive is the owner, and the executive pays the premium. C Company is the owner, but the executive pays the premium. D Board of directors is the owner, and the board of directors pays the premium.

B

All of the following are characteristics of group life insurance EXCEPT A Individuals covered under the policy receive a certificate of insurance. B Certificate holders may convert coverage to an individual policy without evidence of insurability. C Premiums are determined by the age, sex and occupation of each individual certificate holder. D Group life insurance is written as a master policy.

C

An applicant who receives a preferred risk classification qualifies for A Higher premiums than a person who receives a sub-standard risk. B Higher premiums than a person who receives a standard risk. C Lower premiums than a person who receives a standard risk. D Dividends payable for lack of claims.

C

For what reason may a life insurance producer backdate a life insurance policy? A To make a policy effective during a period when the agent's appointment was in force B To shorten the period of contestability C To avoid an increase in premium rate for the insured D To meet sales quotas established by the insurer

C

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? A The policy will be void. B The insurer may deny coverage later, because of the information missing on the application. C The policy will be interpreted as if the insurer waived its right to have an answer on the application. D The policy will be interpreted as if the insured did not have an answer to the question.

C

Which circumstance describes someone who is terminally ill? A A patient who, because of an illness, is expected to live no longer than 24 months B An accident victim who sustains a brain injury and is expected to never emerge from a persistent vegetative state C A patient whose liver cancer has spread to the gallbladder and surrounding lymph nodes D A patient whose illness cannot be cured and who is unable to complete at least 3 activities of daily living

A

Which of the following individuals must have insurable interest in the insured? A Producer B Policyowner C Beneficiary D Actuary

B

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? A Split dollar agreement B Buy-sell agreement C Profit and loss agreement D Key person agreement

B

Violation of unfair discrimination law may result in all of the following penalties EXCEPT A Refusal to renew licenses. B Fines of up to $500 for each act. C Fines of up to $1,000 for each act. D Suspended licenses.

C

An insured has been diagnosed with a form of cancer that would only allow him to live no longer than six months. The insured would be classified as A Acutely ill. B Viatically ill. C Chronically ill. D Terminally ill.

D

How are state Insurance Guaranty Associations funded? A By the Department of Insurance B By NAIC C By the Government D By their members - authorized insurers

D