Life Insurance Basics

A. 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. Survivor protection B. Life planning C. Survivorship insurance D. Juvenile protection provision

A. Terminally ill insured

A viatical settlement is arranged between a viatical company and a/an... A. Terminally ill insured B. Insurance producer C. Beneficiary D. Lender

A. Permanent

An applicant wants to buy a policy that has a cash value element. Which type should she buy? A. Permanent B. Stock C. Investment D. Term

D. Yes, but not unfairly

Are insurance company underwriters allowed to discriminate? A. No. higher risks pay higher premium B. No, discrimination is an unfair practice C. Yes, but only for gender D. Yes, but not unfairly

C. 5 years

An individual insurance agent may operate as a viatical settlement broker without obtaining a separate license if the viatical settlement broker activities are incidental to the agent's business transactions, and if the agent has been licensed for life insurance for at least what time period? A. 1 year B. 3 years C. 5 years D. 10 years

D. Attending Physician Statement

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require? A. A complete medical record B. Sworn health affidavit from the applicant C. Statement of Continued Good Health D. Attending Physician Statement

D. Whether an insurable interest exists between the individual

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. The gender of the applicant B. The type of policy requested C. Which individual will pay the premium D. Whether an insurable interest exists between the individual

C. 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

D. Application

When an insurer begins underwriting procedures for an applicant, what will be the main source for underwriting information? A. Interviews B. State records C. Medical records D. Application

D. When the application is signed and a check is given to the agent

When is the earliest a policy may go into effect? A. When the first premium is paid and the policy has been delivered B. When the insurer approves the application C. After the underwriter reviews the policy D. When the application is signed and a check is given to the agent

B. Their premiums are lower

Which is generally true regarding insureds who have been classified as preferred risks? A. They keep a higher percentage of any interest earned on their policies B. Their premiums are lower C. They can borrow higher amounts off of their policies D. They can decide when to pay their monthly premiums

B. Net premium plus expenses

Which of the following best describes gross annual premium? A. Expense premium B. Net premium plus expenses C. Annual loading D. Basic insurance rate plus commissions

D. Medical background

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance? A. Gender B. Occupation C. Marital status D. Medical background

D. It pays dividends to policyowners

Which of the following is usually true of a participating life insurance policy? A. It may be converted to a term life policy B. It pays dividends to stockholders C. It assesses premiums against stockholders D. It pays dividends to policyowners

B. Human life value approach (HLVA)

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. Lump-sum approach B. Human life value approach (HLVA) C. Needs approach D. Blackout approach