Primerica: Life Insurance Basics
What are the three factors that determine the premium for a particular life insurance policy
Mortality, Interest, and Expense
What document must a producer provide to the insured during policy replacement?
Notice Regarding Replacement
Who must have insurable interest in the insured?
Policyowner
What term describes the fee a person pays an insurance company to receive coverage
Premium
What term is used to describe the frequency and the amount of payment
Premium mode
What are illustrations in a life insurance policy
Presentations of nonguaranteed elements of the policy
What is the main purpose of a company's underwriting unit
Risk selection
What are the personal uses of life insurance
Survivor protection, estate creation and conservation, cash accumulation and liquidity
Who is the beneficiary on a key-person life insurance policy?
The employer
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?
The existence of insurable interest between the applicant and the insured
Who is responsible for the contents of insurance advertisements
The insurance company
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Variable
What is policy replacement
A new policy is issued while an existing policy is terminated or reissued with a reduction of cash value
What is a blackout period for social security benefits?
A period of time during which the surviving spouse does not receive benefits
When must insurable interest exist in a life insurance policy
At the time of application
When must the policy summary for a life insurance policy be delivered to the policy owner?
At the time of policy delivery
What does "liquidity" mean in a life insurance policy
Availability of cash value
What type of policy is typically issued without proof of insurability from the insured
Group policy
Mortality tables are used by insurance companies to predict what?
Life expectancy and the death rates for specific groups of individuals
What type of insurance creates an immediate estate
Life insurance
If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should it be?
Permanent
What type of life insurance offers an applicant a cash value element
Permanent insurance (usually whole life)
What is the purpose of the agent's report during the application process
The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process
A business is the owner and beneficiary of a key-person life policy. When the business collects the policy benefit, how is it taxed
The benefit is received tax free
In calculating the amount of life insurance needed, what is the needs approach based on
The predicted needs of a family after the premature death of the insured
What is insurance underwriting
The process of risk selection and classification
What is the main purpose of the regulation on life insurance policy illustrations
To help the public make educated decisions about buying life insurance
What is the purpose of key person insurance
To minimize the risk of a financial loss because of the premature death of a key employee that has specialized knowledge, skills or business contacts.
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
it will decrease
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy
Either on the date of the application or the date of the medical exam (whichever occurs last)
Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called
Estate conservation
What type of policy issues certificates of insurance to the insureds
Group policy
What type of insurance would perform the function of cash accumulation
Life insurance
What document describes the specific information about a policy
Policy summary
Who is a replacing insurer?
The company that issues a new policy during policy replacement
When planning for survivor protection in life insurance, what needs to be considered
The insured's current assets, liabilities and survivor protection
What is included in part 2 of a life insurance application
Medical information about the prospective insured
All other factors being equal, which premium mode will require an overall higher premium: monthly or annual
Monthly
How does the premium mode affect the total premium paid for insurance for the year?
Higher frequency of payments will result in higher overall premium
What are the three main instances when insurable interest exists in life insurance
Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner
