Chapter 2-Life Insurance Basics

Which of the following premium payment modes would result in the highest overall premium for life insurance? A. Annual B. Semi-annual C. Quarterly D. Monthly

D. Monthly

Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? A. Age B. Medical history C. Gender D. Race

D. Race

Which division of an insurance company is responsible for the selection, evaluation, and classification of risks? A. Solicitation and marketing B. Claims C. Actuarial D. Underwriting

D. Underwriting

An insured submits the full premium along with a completed application for life insurance. Once the policy is issued, when does the coverage begin? A. On the date of the application B. When the policy is delivered C. After a free-look period D. On the date the policy is issued

A. On the date of the application

A substandard risk compared to a standard risk would pay A. A lower premium. B. A higher premium. C. The same premium. D. A premium and a surcharge.

B. A higher premium.

If no receipt is issued at the time of application, a statement of good health is usually required at the time of A. Application. B. Policy delivery. C. The paramedic's exam. D. Policy renewal.

B. Policy delivery.

Life insurance companies use mortality tables to predict A. The number of deaths per year. B. The life expectancy of the proposed insured. C. The increase of investment income. D. The number of declined applicants.

B. The life expectancy of the proposed insured.

The approach to determining the amount of personal life insurance that an applicant needs that considers such factors as the costs associated with death, costs of educating children, and costs of housing is called the A. Human life value approach. B. Needs approach. C. Income replacement approach. D. Indemnity approach.

B.Needs approach.

Social security benefits are available for a surviving spouse until the youngest child reaches age 16. Benefits are later resumed when the surviving spouse reaches the retirement age. What is the time period called during which the surviving spouse does not receive benefits? A. Waiver of benefit B. Retention of capital C. Blackout period D. Elimination period

C. Blackout period

Life insurance death benefits can be used to fund funeral and other expenses that could be otherwise difficult to fund with a loss of the insured's income. Which term is most closely associated with this? A. Cash accumulation B. Life settlement C. Survivor protection D. Liquidity

C. Survivor protection

All of the following are true of key person insurance EXCEPT A. The employer is the owner, payor, and beneficiary of the policy. B. The key employee is the insured. C. The plan is funded by permanent insurance only. D. There is no limitation on the number of key employee plans in force at any one time

C. The plan is funded by permanent insurance only.

The Medical Information Bureau (MIB) is A. A government entity that reviews medical information. B. An association of physicians who write insurance rules. C. A directory of paramedical services and providers. D. A source of medical information to alert insurers to adverse medical history.

D. A source of medical information to alert insurers to adverse medical history.

If an applicant for insurance submits the application and pays the premium at the same time, the insurer must give which of the following to the applicant? A. Consideration B. Certificate of Insurance C. Temporary coverage D. Conditional receipt

D. Conditional receipt

When must insurable interest exist in life insurance? A. Death of the insured B. Policy delivery date C. Policy issue date D. Date of application

D. Date of application

All the following may have an insurable interest in the insured EXCEPT A. The spouse. B. Insured's children. C. The employer. D. Insured's close friend.

D. Insured's close friend