Chapter 3 Exam Review
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?
A debtor has an insurable interest in the life of a lender
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
Charge a higher premium
Which oof the following is NOT an example of a valid insurable interest?
Debtor in the life of the creditor
When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would...
Lower the insured's premium
What describes the specific information about a policy?
Policy Summary
Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly?
The producer
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will
Issue the policy anyway and pay the face value to the beneficiary
Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds?
Vacation Travel Expenses
Which is the primary source of information used for insurance underwriting?
Application
In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits?
Blackout Period
All of the following are business uses of life insurance EXCEPT
Funding against company's general financial loss
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex, occupation of each individual certificate holder
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement Rule