Primerica: Life Insurance Basics

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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


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