Life Insurance Basics

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

In the underwriting process, it was determined that applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?

It will likely be higher because the applicant is a substandard risk

Which of the following information about the applicant is NOT included on Part 1 of the application for insurance

Medical background

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy

The employee is the owner and beneficiary

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

Which of the following is the basic source of information used by the company in the risk selection process?

Application

All of the following are business uses for a life insurance EXCEPT

Funding against general company finicial loss

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not want to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death?

Life insurance proceeds

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 buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance

Which of the following is NOT part of the consent form to an HIV-related given test in New York ?

Applicant's Sexual History

When the partners of the business develop an arrangement whereby should one of them die or become permanently disabled, the other partner would purchase the interest of the deceased or disabled partner at a predetermined price, this is called an

Business continuation plan

Which of the following premium modes would result in highest annual cost for an insurance policy

Monthly

An Applicant who recieves a preferred risk classification qualifies for

Lower premiums than a person who receives a standard risk