Life Insurance 3
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement -This notice must be signed by both the producer and the applicant
Which of the following allows insurers to relieve a minor from premium payments if the minor's insured if the minor's parents have died or become disabled?
Pay Benefit (If he payor, (usually a parent or guardian) become disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age such as 21)
Which of the following allows insurers to relieve an insured from premium payments of a minor if the minor's parents have died or become disabled?
Pay Benefit (If he payor, (usually a parent or guardian) become disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age such as 21)
Which of the following would help to prevent a universal life policy from lapsing?
Target premium (This is the recommended amount that should be paid on a policy to cover the cost of insurance protection and to keep the policy in force throughout its lifetime)
How does an increasing term policy work?
The face amount increase each term and the premium are constant thru the term (As the policy is renewed it does increase the next year but remains constant thru the year)
Are insurance company underwriters allowed to discriminate?
Yes, but not unfairly (The company will disriminateby choosing a good risks over a bad risk person BUT not by race or national origin)
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years
Temporary licenses can last for how long?
180 days
An underwriter is reviewing the medical questions in the application and needs furthur information due to a medical situation the applicant had in the past. What will the underwriter require?
Attending Physician Statement (APS) (This is comes directly from the physician to obtain medical DETAILS about a specific condition. Using a signed authorization which was part of the application)
What is domestic insurer?
Domiciled and sells in domiciled stated
What is an alien insurer?
Domiciled in one country and sells in another country
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurabilty rider (This rider allows the policyowner to purchase specific amounts of additional insurance without proving insurability BUT it is based upon attained age)
What is the main purpose of the seven-pay test?
It determines if the insurance policy is an MEC .
Which of the following would provide an underwriter with information concerning an applicant's health history?
Medical Information Bureau -Inspection Reports provide info on personal information -Medical Exams provides info on current health -MIB provides info on an applicant's medical history
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as
Survivor Protection (This is the ability for life insurance to provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death)
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
The annuitant will receive higher of either the minimum rate or current rate
What is the automatic premium loan provision?
This allows the insurer to deduct an amount of the cash value from the policy in the amount of the premium due
The automatic premium loan provision is activated at the end of the
Grace period
All other factors being equal, the least expensive first-year premium payment is found in
Annually Renewable Term
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100000 (In Joint Life Policy, the death benefit is paid upon the first death only)
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option -With this option the insurance company keeps the principal and pays the interest to the beneficiary at regular intervals
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable (Actually, money borrowed from the cash value is not taxable)
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced (In addition, the insurer needs a copy of the "Notice Regarding Replacement" & send each existing insurance company a written communication about the proposed replacement)
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
The date of the medical exam (When the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is latest), provided that the applicant is found insurable at the rate applied for)
What is the purest form of term insurance and how does it work?
Annually Renewable Term -The death benefit remains level. but the premium increases each year with insured's attained age
What is the purpose of the The Medical Information Bureau?
Protects Insurance companies from adverse selection by high risk persons (assits underwriters in knowing about any adverse medical information the need to know in the underwriting process)
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?
Reduction (The insured's change in lifestyle and habits would likely reduce the chance of health problems)
Installing deadbolt locks on the doors of a home is an example of which method of handling risk?
Reduction (These are steps taken to reduce the chance of losses occurring)
How does a decreasing term policy work?
The face amount decreases each term the premium remains constant throughout the term (yearly)
An insurance company is domicilied in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?
Foreign -a foreign insurer is domiciled in one state and transacts in another state
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A (With this option the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures)
An individual policy was delivered to the policyowner by an agent in person. Which of the following is true? (Hint: Stipulations for receipt of delivery)
The receipt of delivery must contain the policy number and the date of delivery (If the delivered by hand, the delivery receipt must ALSO be signed by policyholder & retained by the insurer for 2 years )
Which of the following types of policies allows he policy owner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life