Chapter 2: Life Insurance Basics

All of the following are personal uses of life insurance EXCEPT

buy-sell agreement

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

cost comparison methods

Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach?

estimated longevity

Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?

human life value approach

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

issue the policy anyway and pay the face value to the beneficiary

Which of the following statements regarding insurable interest in viatical settlements is correct?

it must exist at the time of the issue of the original life policy

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

permanent

Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits?

Viaticals are funded by a third party, and Accelerated Death Benefits are provided by the insurer that issued the original policy

Which of the following statements concerning buy-sell agreements is true

buy-sell agreements are normally funded with a life insurance policy