Life Insurance
Survivor protection
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 A) Survivorship insurance B) Juvenile protection provision C) Survivor protection D) Life planning
National origin
All of the following are factors that an underwriter could use to select and classify risk EXCEPT A) Occupation B) Avocation C) National origin D) Morals
Permanent
An applicant wants to buy a policy that has a cash value element. Which type should she buy A) Investment B) Term C) Permanent D) Stock
It is used to lower premiums
An insurer invest the money it receives from premiums paid by its insureds. Which of the following is TRUE regarding the interest earned on these investments A) It is paid out as dividends B) It is used to fund executive bonuses C) It is used to increase the death benefit D) It is used to lower premiums
Rated
Another name for a substandard risk classification is A) Declined. B) Elevated. C) Rated. D) Controlled
Yes, but not unfairly
Are insurance company underwriters allowed to discriminate A) Yes, but not unfairly B) No, higher risks pay higher premium C) No, discrimination is an unfair practice D) Yes, but only for gender
Predicted needs of the family after the insured's death
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value A) Effect of inflation on income over time. B) Predicted needs of the family after the insured's death. C) Insured's current and future income. D) Insured's annual expenses.
To avoid an increase in premium rate for the insured
For what reason may a life insurance producer backdate a life insurance policy A) To avoid an increase in premium rate for the insured B) To meet sales quotas established by the insurer C) To make a policy effective during a period when the agent's appointment was in force D) To shorten the period of contestability
Any form of life insurance
Partners in a business enter into a buy-sell agreement to purchase life insurance which states that should one of them die prematurely, the other would be financially able to but the interest of the deceased partner, What type of insurance policy may be used to fund this agreement A) Term insurance only B) Permanent insurance only C) Universal life insurance only D) Any form of life insurance
Is defined as the frequency and the amount of the premium payment.
The mode of premium payment A) Does not affect the amount of premium paid. B) Is defined as the frequency and the amount of the premium payment. C) Is the factor that determines the amount of dividends in a policy. D) Is the method used to compute the cash surrender value of the policy
Signed waiver of premium
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A) Payment of premium. B) Delivery receipt. C) Signed waiver of premium. D) Statement of good health
Cash values can be borrowed at any time
What does "liquidity" refer to in a life insurance policy A) The policyowner receives dividend checks each year B) The insured is receiving payments each month is retirement C) Cash values can be borrowed at any time D) The death benefit replaces the assets that would have accumulated if the insured not died
Executive bonus
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) A) Key person policy. B) Fraternal association. C) Aleatory contract. D) Executive bonus
Life expectancy
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors A) Mortality rate B) Risk exposure C) Morbidity D) Life expectancy
A registered nurse
Who may complete a paramedical report A) An underwriter B) A nursing assistant C) A registered nurse D) A spouse
Maintain membership in the Oregon Life and Health Insurance Guaranty Association
All insurance companies admitted to sell life and/or health insurance contracts in Oregon must, as a condition to maintain their certificate of authority A) Have a branch office located in Oregon. B) Sell both individual and group contracts. C) Maintain membership in the Oregon Life and Health Insurance Guaranty Association. D) None of the above
Premiums are determined by the age, sex and occupation of each individual certificate holder
All of the following are characteristics of group life insurance EXCEPT A) Certificate holders may convert coverage to an individual policy without evidence of insurability. B) Premiums are determined by the age, sex and occupation of each individual certificate holder. C) Group life insurance is written as a master policy. D) Individuals covered under the policy receive a certificate of insurance
Change any incorrect statement on the application by personally initialing next to the corrected statement
All of the following are duties and responsibilities of producers at the time of application EXCEPT A) Change any incorrect statement on the application by personally initialing next to the corrected statement B) Explain the nature and type of any receipt the producer is giving to the applicant C) Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information D) Check to make sure that there are no unanswered questions on the application
Buy-sell agreement
All of the following are personal uses of life insurance EXCEPT A Buy-sell agreement. B Survivor protection. C Estate creation. D Cash accumulation
The policy is owned by the company
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT A) Any type of insurance policy may be used. B) The employer pays a bonus to a selected employee to fund the policy. C) It is considered a nonqualified employee benefit. D) The policy is owned by the company
The agent must provide a replacement notice to the applicant
An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step A) The agent must get his supervisor involved in the transaction. B) The agent has no further duties. C) The agent must provide a replacement notice to the applicant. D) The agent must collect the existing policies and turn them over to the replacing insurer
Once every 3 months
How often may a life settlement provider contract an insured regarding the insured's health status if the insured's life expectancy is more than one year A) Once every 3 months B) Not more often than once a year C) Any time D) Once a month
Erase the incorrect answer and record the correct answer
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT A) Note on the application the reason for the change. B) Destroy the application and complete a new one. C) Erase the incorrect answer and record the correct answer. D) Draw a line through the first answer, record the correct answer, and have the applicant initial the change
With the policy
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant A) With the policy B) Upon issuance of the policy C) Prior to accepting an initial premium D) Prior to filling out an application for insurance
Return the application to the applicant for a signature
If an agent fails to obtain an applicant's signature on the application, the agent must A) Sign the application, stating it was by the agent. B) Send the application to the insurer with a note explaining the absence of signature. C) Return the application to the applicant for a signature. D) Sign the application for the applicant
Whether an insurable interest exists between the individuals
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about A Whether an insurable interest exists between the individuals. B The gender of the applicant. C The type of policy requested. D Which individual will pay the premium
Charge a higher premium
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to A) Lower its insurability standards. B) Refuse to issue the policy. C) Charge a higher premium. D) Require a yearly medical examination
Decreases
If an insured changes his payment plan from monthly to annually, what happens to the total premium A) Decreases B) Stays the same C) Doubles D) Increases
The owner
In a life settlement contract, whom does the life settlement broker represent A) The beneficiary B) The life settlement intermediary C) The owner D) The insurer
Executive is the owner, and the executive pays the premium
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium A) Board of directors is the owner, and the board of directors pays the premium. B) Company is the owner, and the company pays the premium. C) Executive is the owner, and the executive pays the premium. D) Company is the owner, but the executive pays the premium
It will likely be higher because the applicant is a substandard risk
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium A The applicant's habits and health do not affect the premiums. B It will likely be lower because the applicant is a preferred risk. C It will likely be higher because the applicant is a substandard risk. D It will likely be the average premium issued to standard risks
Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company
The purpose of the Life and Health Insurance Guaranty Association is to A) Encourage Life insurers to write substandard business. B) Allow producers to continue to solicit insurance, even if the company they represent is financially impaired. C) Protect the reputation of the Insurance Department if it issues a Certificate of Authority to a company that becomes insolvent. D) Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company
It is intended to provide coverage on a date earlier than the date of the issuance of the policy
What is the purpose of a conditional receipt A) It is intended to provide coverage on a date earlier than the date of the issuance of the policy B) It guarantees the applicant that a policy will be issued in the amount applied for in the application C) It serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company D) It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue
To lessen the risk of financial loss because of the death of a key employee
What is the purpose of key person insurance A) To insure retirement benefits are available to all key employees B) To maintain an account that insures the owner of a company remains solvent C) To lessen the risk of financial loss because of the death of a key employee D) To provide health insurance to the families of key employees
Lower the insured's premium.
When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would A) Eliminate pre-existing conditions. B) Help him meet a sales quota for that period. C) Lower the insured's premium. D) Shorten the contestability period
When the application is signed and a check is given to the agent
When is the earliest a policy may go into effect A) After the underwriter reviews the policy B) When the application is signed and a check is given to the agent C) When the first premium is paid and the policy has been delivered D) When the insurer approves the application
Their premiums are lower
Which is generally true regarding insureds who have been classified as preferred risks A) They can borrow higher amounts off of their policies. B) They can decide when to pay their monthly premiums. C) They keep a higher percentage of any interest earned on their policies. D) Their premiums are lower.
Application
Which is the primary source of information used for insurance underwriting A) Medical records B) Private investigations C) Application D) Applicant interviews
An applicant who is a smoker
Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination A) An applicant who is a smoker B) An applicant who was born in another country C) An applicant who is legally blind D) An applicant who has been a victim of domestic abuse
Net premium plus expenses
Which of the following best describes gross annual premium A) Basic insurance rate plus commissions B) Expense premium C) Net premium plus expenses D) Annual loading
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
Which of the following best describes the MIB A) It is a rating organization for health insurance. B) It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. C) It is a government agency that collects medical information on the insured from the insurance companies. D) It is a member organization that protects insured against insolvent insurers
A policy summary
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years A) A notice regarding replacement B) A privacy notice C) A buyer's guide D) A policy summary
Policyowner
Which of the following individuals must have insurable interest in the insured A) Actuary B) Producer C) Policyowner D) Beneficiary
Buyer's Guide
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process A) Policy Summary B) Illustrations C) Buyer's Guide D) Insurance Index
The cash value available to the policyowner
Which of the following is an example of liquidity in a life insurance contract A) The money in a savings account B) The cash value available to the policyowner C) The death benefit paid to the beneficiary D) The flexible premium
To create an estate
Which of the following is the best reason to purchase life insurance rather than annuities A) To create regular income payments B) To liquidate a sum of money over a lifetime C) To create an estate D) To liquidate a sum of money over a period of years
Pays dividends to policyowners
Which of the following is usually true of a participating life insurance policy A) Pays dividends to policyowners B) May be converted to a term life policy C) Pays dividends to stockholders D) Assesses premiums against stockholders
Human life value approach
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 A) Needs approach B) Blackout approach C) Lump-sum approach D) Human life value approach
Monthly
Which of the following premium modes would result in the highest annual cost for an insurance policy A) Monthly B) Quarterly C) Semi-annual D) Annual
Buy-sell agreements are normally funded with a life insurance policy
Which of the following statements concerning buy-sell agreements is true A) Benefits received are considered income taxable B) Buy-sell agreements pay in the event of a medical emergency C) Buy-sell agreements are normally funded with a life insurance policy D) Premiums paid are deductible as a business expense
A debtor has an insurable interest in the life of a lender
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance A) Business partners have an insurable interest in each other B) A husband or wife has an insurable interest in their spouse C) An individual has an insurable interest in his or her own life D) A debtor has an insurable interest in the life of lender
Insurers are barred from requesting HIV testing
Which of the following statements regarding HIV testing for life insurance purposes is NOT true A) The testing practices must meet the criteria of the U.S. Department of Health and Human Services B) HIV testing is regulated at the state level C) Insurers are barred from requesting HIV testing D) Positive test results will be forwarded to the state's Department of Health if a physician is not selected by the applicant
Whole life
Which of the following types of insurance policies would perform the function of cash accumulation A) Credit life B) Increasing term C) Whole life D) Term life
Credit life insurance
Which of the following would be exempt from the policy replacement regulations for insurers A) Term life products B) Credit life insurance C) All annuities D) Group life policies through direct solicitation
Vacation travel expenses
Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds A) Debt cancellation B) Day care C) Vacation travel expenses D) Travel expenses for family to come to the funeral
To help the insured understand all aspects of the contract
Why should the producer personally deliver the policy when the first premium has already been paid A) To ensure the producer gets paid commission B) To find out how the family has been doing since the initial presentation C) To make sure the policy is not stolen or lost D) To help the insured understand all aspects of the contract
To help the insured understand all aspects of the contract
Why should the producer personally deliver the policy when the first premium has already been paid A) To find out how the family has been doing since the initial presentation B) To make sure the policy is not stolen or lost C) To help the insured understand all aspects of the contract D) To enure the producer gets paid commission
