Nebraska Life & Health - Chapter Flashcards
Morale
A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?
20-year level term
A policy states that it will pay a specified face amount if the insured dies during the 20 year premium-paying period and nothing if death occurs after the 20 year period. What type of policy is this?
The agent
If an applicant does not receive his or her insurance policy, who would be held responsible?
Cash value is paid to the policyowner
What happens to the cash value when a whole life insurance policy matures?
The premium increases with each renewal
What happens to the premium in an annually renewable term life policy?
An absolutely true statement upon which the validity of the insurance contract is based
What is a warranty in an insurance contract?
Medical information about the prospective insured
What is included in Part 2 of a life insurance application?
Return the application for completion
What is the best way to handle incomplete insurance applications?
Evidence of insurability is not required
What is the main advantage of converting from group life to individual coverage?
Risk selection
What is the main responsibility of a company's underwriting unit?
Premium payment mode
What is the major difference between the most common types of whole life policies: Straight Life, Limited Payment, and Single Premium?
The agent's
Whose responsibility is it to determine that all the questions on an insurance application are answered?
Universal life
In what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?
Loss
Insurance is a contract that protects the insured from what?
Domestic, foreign, and alien
Insurers are classified according to their domicile. What are the three types of insurers?
Estate conservation
Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called?
Life expectancy and the death rates for specific groups of individuals
Mortality tables are used by insurance companies to predict what?
Inspection report
What type of report provides information about the applicant's hobbies, habits, and financial status?
Pure
What type of risk is insurable?
Single premium whole life
What type of whole life policy generates immediate cash value?
Complete a new application or ask the applicant to initial the correction on the original application
When a change needs to be made on an application for insurance, which is the best method for correcting the information?
Insurer
When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?
Group policy
What type of policy issues certificates of insurance to the insureds?
When the insurer approves a prepaid application
In forming an insurance contract, when does an acceptance usually occur?
When the insurance application is submitted
In insurance, when is the offer usually made on a contract?
Agent or producer
According to the Law of Agency, a principal is represented by whom?
Insurer
In the agent/insurer relationship, who is considered the principal?
The benefit is received tax free
A business owner is the owner and beneficiary of a key-person life policy. When the business collects the policy benefit, how is it taxed?
Pure risk
A situation in which a person can only experience a loss and no gain presents what type of risk?
Monthly
All other factors being equal, which premium payment mode will require an overall higher premium: monthly or annual?
Moral
An applicant conceals relevant health info on the application. The applicant presents what type of hazard?
Foreign
An insurance company is domiciled in California and transacts insurance in Nevada. What is the insurer's classification in Nevada?
Foreign
An insurance company that is formed under the laws of another state is known as what type of insurer?
Mutual
An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?
Variable
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Either on the date of the application or the date of the medical exam (whichever occurs last)
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?
Universal life
Between adjustable life and universal life policies, which one provides more flexibility to the policyowner?
No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business to practice
Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?
Hazards
Conditions that increase the chance of a loss are known as what?
Uncertainty of loss
For the purpose of insurance, what is risk?
Annually renewable term
Group life insurance policies are written as what type of insurance?
Higher frequency of premium payments will result in higher overall premium
How does the premium mode affect the total premium paid for insurance for the year?
Send the application back to the applicant for signature
If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?
The existence of insurable interest between the applicant and the insured
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?
Evidence of insurability
If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?
It will decrease
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Authorized or admitted
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
Upon the first death
In a joint life policy, when is the death benefit paid?
The insured's attained age
In annually renewable term policies, what is the annual premium based upon?
The predicted needs of a family after the premature death of the insured
In calculating the amount of life insurance needed, what is the needs approach based on?
Stock company
The insurer organized to return a profit to the stockholders is what type of insurer?
Loss
The reduction, decrease, or disappearance of value of the person or property insured in a policy is known as what?
Fiduciary
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Mutual company
The type of insurance company organized to return any surplus money to its policyholders is known as what?
The death benefit increases each year by the amount of the cash value increases
Under Option B in a universal life policy, what happens to the death benefit?
Permanent insurance (usually, whole life)
What type of life insurance offers an applicant a cash value element?
Limited-pay Whole Life
What type of life insurance policy is Life Paid-up at Age 65?
Term
What type of life insurance policy offers pure death protection?
Speculative
Wagering on a sporting event is known as what type of risk?
Presentations of nonguaranteed elements of the policy
What are illustrations in a life insurance policy?
Group's purpose, size, financial strength and turnover
What are the characteristics of the group that underwriters will consider before issuing a group life policy?
Option A- level death benefit, and Option B- increasing death benefit
What are the death benefit options in universal life policies?
Loss must be 1) due to chance, 2) definite and measurable, 3) statistically predictable, 4) not catastrophic, and 5) coverage cannot be mandatory
What are the five characteristics of an ideally insurable risk?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
What are the four elements of an insurance contract?
Loan values
What are the living benefits of whole life insurance?
Survivor protection, estate creation, estate conservation, cash accumulation, and liquidity
What are the personal uses of life insurance?
Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate
What are the strategies used by underwriters to prevent adverse selection?
Mortality, interest and expense
What are the three factors that determine the premium for a particular life insurance policy?
Insuring your own life, the life of a family member, or the life of a business partner or someone else who has a financial obligation to the policyowner
What are the three main instances when insurable interest exists in life insurance?
Express, implied, and apparent
What are the three types of agent authority?
Physical, moral, morale
What are the three types of hazards?
Insurance
What do individuals use to transfer their risk of loss to a larger group?
Policy summary
What document describes the specific information about a policy?
Certificate of Authority
What document is required for an insurance company to transact insurance?
Face amount
What does "level" refer to in level term insurance?
Availability of cash value
What does liquidity mean in a life insurance policy?
Insurers
What entities make up the Medical Information Bureau?
The process of risk selection and classification
What is insurance underwriting?
To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers
What is the purpose of insurance guaranty associations?
To minimize the risk of financial loss caused by the death of a key employee
What is the purpose of key person insurance?
The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process
What is the purpose of the agent's report during the application process?
Peril
What is the term for the causes of loss insured against in an insurance policy?
Premium mode
What is the term that describes the frequency and the amount of the premium payment?
Premium
What term describes the fee a person pays an insurance company to receive coverage?
Insurable interest and consent
What two elements are necessary for a life insurance contract to have a legal purpose?
Life insurance
What type of insurance creates an immediate estate?
Alien
What type of insurer is formed under the laws of another country?
When the policy is delivered and the premium is paid
When does an insurance policy go into effect?
At the time of application
When must insurable interest exist in a life insurance policy?
At the time of policy delivery
When must the policy summary for a life insurance policy be delivered to the policyowner?
The insured's current assets, liabilities and survivor's needs
When planning for survivor protection, what needs to be considered?
Adverse selection
When risks with higher probability of loss are seeking insurance more often than other risks, this is known as what?
When the insured reaches age 100
When would a 20-pay whole life policy endow?
When it is intentional and material
When would a misrepresentation on an insurance application be considered fraud?
The insurance company
Who is responsible for the contents of insurance advertisements?
The employer
Who is the beneficiary on a key-person life insurance policy?
All insurers authorized to write insurance within a state
Who must be a member of insurance guaranty associations?
The policyowner
Who must have insurable interest in the insured?
Stockholders
Who owns stock companies?
Insurance company
Whom does an insurance company represent?
