Life and health Exam 2

telephone solicitation calls before or after are prohibited

8am to 9pm

Which of the following best describes a viatical settlement?

A terminally ill insured/owner sells his or her policy to a third party for much needed cash

If a producer notices that an application has unanswered questions, what is the best course of action?

Return the application back to the applicant for completion prior to submission

Permanent insurance is?

designed to provide the beneficiary a death benefit if the insured dies and provide the insured a build up of cash value

What are the names of the dates where insurance coverage begins and when coverage ends?

effective date and expiration date

A life insurance applicant pays the initial premium at the time of application and receives a Conditional Receipt. If coverage is issued as applied for, when did coverage go into effect?

either on the date of the application or completion of the medical exam

In a replacement transaction, the insurer that is having its policy replaced is known as the

existing insurer

What is the difference between net premium and gross premium?

expense loading

The date on which insurance coverage is no longer in effect is referred to as the

expiration date

All of the following are things a producer should do when meeting with the client after the policy has been issued

explain the policy, go over benefits and ratings and review endorsements and riders

The term 'mode' refers to the?

frequency of premium payments

Part 1 of the application consists of

gender, residence and occupation

The income-earning ability lost to dependents by the insured's premature death is a way to evaluate an individual's insurance needs. What is this method?

human life value approach

The Needs Analysis Approach always assumes the death of the insured to be?

immediate

Debit life insurance is classified as which of the following?

industrial life insurance

The medical information bureau is formed by

insurance companies

The process of calculating life insurance net premium requires consideration of all of the following

insureds age, gender and rate of interest assumed

The MIB obtains its information from who?

insurers

What is a reserve?

is an amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders

What is the term for the insured's age on the policy issue date?

issue original age

What is considered a good result from an underwriters action when an individual life insurance policy is issued as applied for?

issued standard

What is the buyers guide?

it assists prospective buyers of life insurance and includes descriptions of all types of life insurance and comparisons of their relative costs

What is decreasing term life?

it reduces in death benefit as the loan obligation reduces in balance. It is also is the least expensive form of insurance and is temporary

Interest earned on premiums paid to an insurer helps to ________ the premiums charged

lower

Mortality cost ______ interest (investment earnings) = equals the pure rate.

minus

Some characteristics of Term life insurance are?

no cash or loan value, can be written separately or with other types of insurance and will expire at an attained age or time

If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a:

notice of replacement

In order to receive a policy dividend, the policyowner must own what kind of policy?

participating policy

In determining the proper amount of life insurance, the Needs Analysis Approach takes into consideration all of the following factors

paying off mortgage, creating college funds and paying off debts

The person who generally has the rights in the insurance policy is the

policyowner

When an individual qualifies for a lower premium or rate than standards ricks, the insured is considered a

preferred risk

What is a type of ordinary life insurance?

straight whole life

If a client is unsure about whether or not he/she can obtain coverage or how much it would cost, what can the producer suggest to see what the insurer can do without tying up any of the client's funds?

submit a trial application

Once the gross amount of dollars required to fund an insured's needs has been determined using the needs analysis approach, what is the next step?

subtract any assets available to fund financial needs after death

Part 2 of the application consists of all of the following information

surgeries, hospitalizations and past/present health

Which of the following receipts states that coverage will begin immediately for a specific length of time, regardless of whether the applicant is ultimately approved for coverage by the insurer?

temporary insurance agreement

A young couple just starting out on a limited budget, but having a large need for life insurance coverage, most likely would be best suited for what life insurance?

term life insurance

What is conservation?

the act of saving the existing policy and preventing it from being replaced

Producer Andy is sent a newly issued policy by his insurer. Andy should now do what?

visit the insured in person to deliver the policy

XYZ Insurer has decided to issue a policy to a particular applicant. What is the next step in this insurance transaction?

will send the policy to the producer for delivery to the insured

The human life approach concerns itself

with the replacement of future earnings and the value of the insured's services in the event of premature death

a typical life insurance application contains how many parts?

2

The Attending Physician's Statement (APS) is completed by?

An applicant's physician to provide information about the applicant's medical history

Which underwriting source is primarily used when an application reveals conditions for which more medical information is required?

Attending Physician's Statement

Frieda wants coverage until she has paid back her business loan in 10 years. The ideal life insurance policy with the least expense would be:

Decreasing term life

What is an insurer permitted to do if and when it discovers during the underwriting process that a proposed insured has AIDS?

Insurers may refuse to issue a policy to if there are positive HIV test results

What type of coverage is the best in regard to protecting the beneficiary and to provide a living benefit for the policy owner?

Permanent Insurance

Who developed the buyers guide?

The NAIC

When soliciting insurance, producers are governed by state rules and regulations under the title of

Unfair trade practices

What is governed under the rules and regulations dealing with Unfair Trade Practices with regard to how information can be communicated to the public?

advertising

What is used by an insurer to collect information from the applicant/insured for underwriting purposes?

an application

What is the process of selection, classification and rating, and determining if someone is insurable?

home office underwriting

In determining the proper amount of life insurance coverage for an insured, the ____ approach measures the projected future earnings and the value of the insured's services in the event of his or her premature death.

human life value

All of the following signatures would be required on a life insurance application for an adult

producer, applicant and insured

The needs analysis approach considers these factors when determining the amount of coverage someone needs

providing education funds for children, paying off mortgage and providing spouse with a lifetime income

Martin is age 30 when he applies for life insurance. The underwriter classifies him the same as a person age 40 and his policy is issued with a premium for a person age 40. What substandard rating has been applied to Martin's policy?

rated up age

In group life insurance, the coverage is normally written on a ___ providing no cash value or living benefits as are found in individual cash value policies.

renewable term basis

What should the producer do, if the insured is in the hospital with a heart condition pending surgery on the day the newly issued policy was to be delivered and initial premium collected?

return the policy to the insurer with a letter of explanation

All of the following are true of the group life insurance classification

the amount of coverage can be fixed, changed only within the master contract and

The person offering him/herself or another person to be insured by the contract best defines the:

the applicant

the person who submits an application for insurance is always referred to as

the applicant

When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place?

the applicant is making an offer to the insurer

When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place? The quiz is currently paused.

the applicant is making an offer to the insurer

In order for an insurance company to determine if it will issue a policy, what document must always be submitted for review?

the application

What are major sources of underwriting information?

the application, medical exams and attending physicians statements

The Do Not Call Registry and the Telemarketer Sales Rule were created by the

the federal trade commission

When an insurer accounts for the interest and mortality factors, then adds additional charges to meet all costs of a contract, it derives

the gross premium

All of the following are factors that are taken into consideration when using the Human Life Value approach in determining the proper amount of life insurance coverage

the insured's planned retirement age, income and an inflation assumption

A producer provided a conditional receipt to an applicant who paid the first premium with the application. The applicant died before a policy was issued. If the insurer denies the claim, which party would have to prove the reasons for its actions if the claim was challenged?

the insurer

In the underwriting process who pays for the required medical exams?

the insurer

Which settlement industry has increased awareness of STOLI/IOLI?

the life settlement industry

All of the following become part of the entire contract

the policy, any riders and the application

When reviewing an application, the underwriter decides to reclassify the risk. What does that mean for the client?

the premium could increase or decrease

What is an insured's attained age?

their age at renewal or conversion

What is the purpose of determining the proper amount of life insurance needed for a prospective client?

to prevent both over and under insuring

Applicants must consent to be tested and be informed that testing for ________ may determine insurability.

HIV

If a premium is collected with a life insurance application and coverage begins immediately for a specific length of time regardless of whether the applicant is ultimately approved by the insurer, the receipt given by the agent is called a

a binding receipt

What is used when the insured's age, medical history, or amount of coverage does not require a medical exam for underwriting purposes?

a nonmedical application

If a medical exam is required as part of the underwriting process, who normally conducts the exam?

a physician or nurse

An Errors & Omissions policy primarily covers the liability of

a producer or agency

What is usually treated as a liability?

a reserve

What settlement is when a terminally ill insured sells his or her life insurance policy to a third party other than an insurance company, for an amount less than the policy's death benefit, but greater than its cash values?

a viatical settlement

If a client chooses to pay premiums other than annually, what can he or she expect?

additional charges to offset lost interest, earnings, and increased administrative costs

Why should a producer collect a premium at the time the application is completed?

because without it coverage cannot go into effect as there would be a lack of consideration

By properly naming the ________, life insurance proceeds will bypass the probate process.

beneficiary

By what means does the client acknowledge that an insurer may use services and information provided by third parties to gather information during the underwriting process?

by signing the application

How does life insurance reduce financial loss upon the insured's death?

by transferring the risk to the insurer

What personal use of life insurance is specifically designed to provide benefits to the policy owner while the insured is still alive?

cash accumulation

If a home office underwriter obtains MIB codes inconsistent with information provided on the application, what is the underwriter required to do?

conduct further investigation to obtain more information prior to making a decision