Life Insurance ch. 5 & 6- Premiums, Proceeds and Beneficiaries & Life Insurance Underwriting and Policy Issue

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? A. Fair Credit Reporting Act B. Medical Information Bureau C. Part lll of the application D. Life Insurance Buyer's Guide

A. Fair Credit Reporting Act

What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made? A. Irrevocable beneficiary B. Tertiary beneficiary C. Primary beneficiary D. Revocable beneficiary

A. Irrevocable beneficiary

Which of the following best describes a contingent beneficiary? A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured B. Person designated by the primary beneficiary's executor to receive policy proceeds C. Person designated by the state to receive policy proceeds in the event that the primary beneficiary dies D. Person designated by the insurance comapany to receive policy proceeds in the event that the primary beneficiary dies

A. Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT A. Signed HIPAA disclosure B. Signed amendment C. Signed statement of Good Health D. The required premium

A. Signed HIPAA disclosure

When an insurance application is taken by a producer, which of these statements is true? A. The applicant should have an attorney present during the application process B. Any changes made on the application require the applicant's initials C. Any changes made on the application can later be initialed by the producer if the applicant is unavailable D. The producer has the discretion to ask or not to ask any of the questions listed on the application

B. Any changes made on the application require the applicant's initials

What is being delivered during a policy delivery? A. A binding receipt to the proposed insured B. Insurance contract to the proposed insured C. Application and initial premium to the insurer D. Policy summary sheet and disclosure material to the proposed insured

B. Insurance contract to the proposed insured

The underwriting process involves all of these EXCEPT for A. Credit report B. Policy loan C. Risk classification D. Application

B. Policy loan

Which of the following statements is CORRECT about an agent who is taking an insurance application? A. The agent should avoid asking the applicant questions that may cause embarrassment B. The agent should have the applicant initial any changes made on the application C. The agent may allow a member of the applicant's immediate family to sign the application if the applicant is not available D. The applicant may answer routine questions on the application for the applicant

B. The agent should have the applicant initial any changes made on the application

Which statement regarding the Change of Beneficiary provision is true? A. The beneficiary can only be changed with the consent of the insurer B. The policyowner can change the beneficiary C. The insured can change the beneficiary D. A beneficiary change is subject to underwriting procedures

B. The policy owner can change the beneficiary

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n) A. delayed effective date B. exclusion for the medical condition C. extended Contestable period D. Concealment clause

B. exclusion for the medical condition

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT A. policy is delivered B. free-look period has expired C. insurance company issues policy D. initial premium is collected

B. free-look period has expired

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine A. driving history B. probability of making timely premium payments C. if applicant is a tobacco user D. overall health of the applicant

B. probability of making timely premium payments

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and A. a Medical Information Report B. the initial premium C. forward it immediately to the insurer D. Attending Physician Statement

B. the initial premium

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n) A. Federal Fair Credit Act Violation B. Title 18 Fraud violation C. Anti-Money Laundering violation D. Unfair Trade Practice violation

C. Anti-Money Laundering violation

Any changes made on an insurance application requires the initials of whom? A. Insured B. Agent C. Applicant D. Beneficiary

C. Applicant

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? A. Agent's report B. MIB report C. Inspection report D. Attending physician's report

C. Inspection report

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need? A. Revocable B. Contingent C. Irrevocable D. Primary

C. Irrevocable

Which of these factors do NOT play a role in the underwriting of a life insurance policy? A. Avocations B. Credit status C. Marital status D. Occupation

C. Marital Status

On a life insurance policy, who is qualified to change the beneficiary designation? A. Payer B. Primary beneficiary C. Policyowner D. Insurer

C. Policyowner

When does a life insurance contract become effective if the initial premium is not collected during the application process? A. After all medical and personal information has been evaluated B. When insurer receives initial premium from the producer C. When producer delivers policy and collects initial premium D. After application has been approved by the underwriters

C. When producer delivers policy and collects initial premium

What percent of personal life insurance premiums is usually deductible for federal income tax purposes? A. 100% B. 75% C. 50% D. 0%

D. 0%

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? A. Primary beneficiary's estate B. Primary beneficiary's next of kin C. Insured's estate D. Insured's contingent beneficiary

D. Insured's contingent beneficiary

A policyowner's rights are limited under which beneficiary designation? A. Revocable B. Tertiary C. Contingent D. Irrevocable

D. Irrevocable

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? A. Interest Only B. Fixed Period C. Fixed Amount D. Life Income

D. Life Income

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to A. R's estate B. Q's estate C. P and Q's estate D. P only

D. P only

Which of these do NOT constitute policy delivery? A. Policy mailed to applicant B. Policy mailed to agent C. Policy delivered to the applicant by the agent D. Policy issued with a rating

D. Policy issued with a rating

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? A. Request will be accepted only if in writing by the insured B. Change will be made only if premiums are paid current C. Change will be made immediately D. Request of the change will be refused

D. Request of the change will be refused

Which parts of a life insurance policy are guaranteed to be true? A. Rating B. Representation C. Statement D. Warranty

D. Warranty

A life insurance application must be signed by all of these EXCEPT A. the policyowner B. the agent C. the insured (if an adult) D. beneficiary

D. beneficiary

Quarterly premium payments increase the annual cost of insurance because A. insurer risk exposure is greater B. interest to the insurer is increased while administrative costs are decreased C. mortality costs are greater D. interest to the insurer is decreased while the administrative costs are increased

D. interest to the insurer is decreased while the administrative costs are increased

All of these are considered sources of underwriting information about an applicant EXCEPT Inspection Report Credit Report Rating Services Medical Information Bureau

Rating Services