Life and Health: Life Insurance Basics and Life Insurance Policies

An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have?

Industrial life

According to the Replacement Rule, replacement of life insurance is defined as a process in which

A new policy is bought and an old policy is converted to a Reduced Paid-up policy

The mode of premium payment

Is defined as the frequency and the amount of the premium payment.

Which of the following is NOT an example of business use of Life Insurance?

workers compensation

Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called

Suitability

what must happen when an individual policy or annuity has been personally delivered to the policy owner?

The policy owner must sign a delivery receipt

The responsibility of making certain that an application for insurance is filled out completely, correctly and to the best if his or her knowledge is the responsibility of whom?

The producer

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

All advertisements are the responsibility of the

insurer

If insured changes plan from monthly to annually, total premium

decreases

which of the following information about the applicant is not included in the general information section of the application for insurance?

medical background

Another name for a substandard risk classification is

rated

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

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?

Need is predicted using the number of years until the insured's retirement.

When must insurable interest exist in a life insurance policy?

At the time of application

An underwriter is reviewing the medical questions in the application and needs further information... They require a

attending physician statement

Which of the following premium modes would result in the highest annual cost for an insurance policy?

monthly

Which of the following statements concerning buy sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy

if an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be worried about

whether an insurable interest exists between the individuals