Final exam

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

guaranteed insurability

a rider that is included at the time of application or can be added at a later date which allows the insured to increase the amount of insurance without proving evidence of insurability

guaranteed insurability

apply to all individual and group life insurance policies except variable life, annuity contracts, credit life or life insurance policies with death benefit under $10000

regulations on illustrations

when insurance is obtained through a what the insures are sharing the risk of loss with other subscribers

reciprocal insurer

Most insurers buy ___ to protect themselves in the event of a catastrophic loss

reinsurance

chance of loss

risk

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

settlement option

is exercises when an immediate annuity is purchased with the face amount at death or with the cash value at surrender

settlement option

the possibility for gain or loss and is not insurable

speculative risk

What would help prevent a universal life policy from lapsing?

target premium

recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its life time

target premium

policy that does not have cash value

term insurance

which of the following may not be included in an insurance company's advertisement

that its policies are covered by a state guaranty assocation

all group life insurance policies have a grace period of

31 days

what is the waiting period on a waiver premium rider in life insurance policies

6 months

the least expensive first year premium is found in which of the following policies

annually renewable term

time during which accumulated money is converted into an income stream

annuity period

provide additional information from an outside source about a customers character and reputation and used under the fair credit reporting act

consumer and investigative consumer reports

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

costs of training a replacement

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

equal to the original policy for as long as the cash values will purchase

condition that could result in a loss

exposure

specified period of years is selected and equal installments are paid to the recipient. both the principal and interest are liquidated together over the selected period of time

fixed period settlement option or period certain

something that increases the chance of loss

hazard

allows insurers to predict claims more accurately

law of large number

applies to groups of people not to individuals

law of large number

to be insurable what must be calculable

losses

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

must be informed of the source of the report/ cons

transfer to pure risk to the insurance company in consideration for a premium

insurance

are not required to be uniform from one state to another

insurance laws

information obtained through an investigation and interviews with associates friend and neighbors of the consumer

investigative consumerreport

what two annuity will pay until the last annuitant has died

joint and survivor (surviving annuitant may receive reduces payments)

pays for cost of running the business and replacing the employee

key person insurance policy

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do?

pay a reduced death benefit

The cause of loss such as fire, wind, or theft

peril

the presence of what hazard increases the chance of a loss occurring

physical

The chance of loss without any possibility for gain is known as:

pure risk

insurance option would be considered a risk sharing arrangement

reciprocal

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

twisting

misrepresentation that persuades insured or a policyowner to his or her detriment to cancel lapse or switch policies

twisting

the incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for how many years, it does not apply to statements relating to age sex and identity

two

life policy have cash value so they allow policy loans

variable universal life policies