Life Insurance Basics

If an applicant is a minor, who signs the application? A) The producer B) A Probate Court Judge C) Their Guardian D) Any Adult

C

In a replacement transaction, the insurer that is having its policy replaced is known as the _______ insurer. A) Conserving B) Insolvent C) Existing D) Replacing

C

In a replacement transaction, the insurer that is having its policy replaced is known as the _______ insurer. A) Replacing B) Insolvent C) Existing D) Conserving

C

Interest earned on premiums paid to an insurer helps to ________ the premiums charged. A) Increase B) Stabilize C) Lower D) Standardize

C

When an insured decides to change her mode of premium payment from monthly to annually, the total premium due would: A) Increase B) Decrease C) Remain the same D) Fluctuate

B

J buys a life insurance policy specifically intending for the death benefit to be used to cover estate taxes. What is the correct term for using life insurance in this way? A) Estate creation B) Preneed planning C) Estate conservation D) Survivor protection

C

Part 2 of the application consists of all of the following information, except: A) Surgeries B) Past and present health C) Date of birth, gender D) Hospitalizations

C

Which of the following best describes producer field underwriting? A) Conducting blood pressure readings, taking the applicant's pulse, and drawing blood B) Taking the time to probe beyond the stated questions on the application based upon the applicant's responses C) Obtaining the applicant's medical records, conducting a credit history check, and logging in to the MIB D) Interviewing the applicant's neighbors about the applicant's morals and character

B

A generic brochure was developed by the ________ to assist prospective buyers of life insurance, which includes descriptions of all the basic types of life insurance and comparisons of their relative costs. A) FIO B) NAIC C) FINRA D) SEC

B (National Association Of I Commissioners)

The MIB is used in the underwriting of all of the following types of insurance, except: A) Life B) Disability Income C) Auto and Homeowners D) Critical Illness

C

The term 'mode' refers to the: A) Claims process B) Method used in policy delivery C) Frequency of premium payments D) Rate the underwriters apply to the policy

C

When an insured decides to change her mode of premium payment from annually to monthly, the total premium due would: A) Remains the same B) Fluctuate C) Increase D) Decrease

C

During the application process, a mistake is made by the applicant in answering one of the health questions and needs to be corrected. What is the best way to go about this? A) The producer should simply make a note in the agent report section of the application describing the error and what the true response was supposed to be B) The licensed producer has the applicant's implied authority to make any necessary changes to the application on the applicant's behalf C) Have the applicant initial the change or start over with a completely new application D) Submit the application as is and see if the insurance company catches the mistake

C

All of the following are underwriting criteria taken into account by the insurer in the underwriting of individual life insurance cases, except: A) Education level completed B) Medical history C) Physical condition D) Gender

A

An insurance company must adhere to the __________ when gathering information about an applicant from third parties. A) Fair Credit Reporting Act (FCRA) B) Medical Information Bureau Rules C) Federal Trade Commission Act (FTCA) D) Truth in Underwriting Regulations

A

Any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: lapsed, forfeited, surrendered, terminated, reduced in value, amended with a reduction in benefit or term, have a reduced cash value, or is subjected to borrowing, is best known as a __________. A) Replacement B) Conversion C) Re-entry D) Reissuance

A

In a replacement sale all of the following are producer responsibilities, except: A) Reimburse the applicant for any surrender charges that may be incurred as a result of the transaction B) Complete a notice regarding replacement with applicant and producer signatures C) Obtain information regarding the in force policies including name and policy numbers D) Provide copies of the notice regarding replacement and any sales proposals to the applicant and replacing insurer

A

In a replacement transaction, all of the following are insurer duties and responsibilities, except: A) Contact the client to assure that they understand the transaction B) Notify the existing insurer C) Abide by the state required holding period for all replacement documentation D) Maintain copies of the information provided by the producer

A

The HIV Consent Form specifies which types of individuals may receive __________. A) The test results B) The underwriter's decision C) The name of the medical lab used and lab work D) The amount and type of policy applied for

A

Ultimately it is up to the _______ to determine if the proposed insured is an acceptable risk. A) Home office underwriter B) Home office actuary C) Field underwriter D) Insured's primary care physician

A

When an applicant completes the insurance application in its entirety and provides the producer with a premium check, what in effect has taken place? A) The applicant is making an offer to the insurer B) The producer is making an offer of insurance to the applicant C) The applicant has given the producer the authority to negotiate the terms of the contract with the insurer D) The applicant is accepting the producer's offer of coverage

A

Which of the following is most likely to pay the highest premium for a disability income policy, all other factors being equal? A) Male, age 40, firefighter B) Female, age 40, banker C) Male, age 40, banker D) Female, age 40, firefighter

A

Which of the following is not a major source of underwriting information? A) Past life insurance owned B) Attending Physician's Statement C) The application D) Medical exams

A

Why should a producer collect a premium at the time the application is completed? A)Without it, coverage cannot go into effect, as there would be a lack of consideration B)It allows the insurer to afford to pay for any required medical records or tests C)It allows the producer to get paid faster D)It helps the home office with its cash flow

A

The insurance company must meet requirements under the _____ when gathering information about an applicant from a third party. A) FCRA B) NAIC C) SEC D) FINRA

A (Fair Credit Reporting Act)

An insurer has issued a new policy and mailed it to the producer. The producer should: A) Deliver the policy to the insured in person and obtain a delivery receipt B) Notify the insured by phone that a policy has been issued C) Review the policy for accuracy and sign the receipt on behalf of the insured D) Maintain the policy securely in his office files

A (MUST be directly to the policyowner with a signed delivery receipt: - Certified Mail - Personal Delivery - registered mail)

A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________. A) An advertisement B) A policy summary C) A hypothetical D) Sales literature

B

If a copy of the application, which led to a life insurance policy being issued, is attached to the policy: A) It is provided merely as a convenience to the policyowner so that they will have a record of the transaction B) It is considered part of the entire contract C) It is a way for the insurer and policyowner to evidence who the producer was at the time of application D) It can be used by the insurance company later on if the insured wants to increase their coverage instead of using a new one

B

In a policy summary all of the following must be shown as being guaranteed, except: A) Interest rates B) Dividends C) Cash values D) Premiums

B

In a replacement sale all of the following are producer responsibilities, except: A) Obtain information regarding the in force policies including name and policy numbers B) Reimburse the applicant for any surrender charges that may be incurred as a result of the transaction C) Complete a notice regarding replacement with applicant and producer signatures D) Provide copies of the notice regarding replacement and any sales proposals to the applicant and replacing insurer

B

Which of the following best describes a Statement of Good Health? A) It is a sworn oral statement made by the insured at time of application which allows for coverage to come into effect B) It is required with all policy deliveries to confirm the underwriting class that was assigned C) It verifies that the insured has not suffered a serious illness or injury since the application date if the premium was not paid at the time of application D) It is the producer's authority to raise the rate if the insured does not appear to be in good health at the time of policy delivery

C

Which of the following statements about policy roles is TRUE? A) The applicant, insured, and policyowner must approve any changes to a policy in writing B) The insured and the policyowner are always the same C) The insured and the policyowner are usually the same, but not necessarily D) Any changes to a policy must be approved by both the insured and policyowner in writing

C

Whose signature is not required on a life insurance application? A) Insured B) Policyowner C) Beneficiary D) Producer

C

_______________ is the process of selection, classification and rating, and determining if someone is insurable. A) The agent's report B) Field underwriting C) Home office underwriting D) Completing the application

C

Which of the following personal uses of life insurance is specifically designed to provide benefits to the policyowner while the insured is still alive? A) Estate conservation B) Estate creation C) Cash accumulation D) Charitable bequests

C (Rest of the options are choices when the insurer dies)

How does life insurance reduce financial loss upon the insured's death? A) Through applicant risk retention strategies B) Through reinsurance risk techniques C) By eliminating the risk D) By transferring the risk to the insurer

D

In life insurance, which of these is the earliest point in time at which the Buyer's Guide is required? A) Renewal B) Issuance C) Delivery D) Application

D

Which of the following is included in Part I of a Life Insurance Application? A) Hospitalizations and surgeries B) Present health C) Family health history D) Name and Occupation

D (Part 1 of Life Insurance is General Information while Part 2 is all about Medical Health )