Ohio Life, Accident & Health Insurance Exam (Series 11-35), Life Insurance Basics
A business is the owner and beneficiary of a key-person life policy. When the business collects the policy benefit, how is it taxed?
The benefit is received tax free
Who is the beneficiary on a key-person life insurance policy?
The employer
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?
The existence of insurable interest
Who is responsible for the contents of insurance advertisements?
The insurance company
When planning for survivor protection in life insurance, what needs to be considered?
The insured's current assets, liabilities, and survivor's needs
In calculating the amount of life insurance needed, what is the needs approach based on?
The predicted needs of the family after the premature death of the insured
What is insurance underwriting?
The process of risk selection and classification
What is the purpose of key person insurance?
To minimize the risk of financial loss caused by the death of a key employee
What is the purpose of insurance guaranty association?
To protect policy owners, insureds, and beneficiaries from financial losses caused by insolvent insurers
What is the purpose of the agent's report during the application process?
Agent's personal observations about the proposed insured which may help during the underwriting process
Who must be a member of insurance guaranty associations?
All insurers authorized to write insurance within the state
When must insurable interest exist in a life insurance policy?
At the time of application
When must the policy summary for a life insurance policy be delivered to the policy owner?
At the time of policy delivery
What does liquidity mean in a life insurance policy?
Availability of cash value
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
Decrease
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?
Either on the date of the application or the date of the medical exam, whichever occurs last
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?
Estate conservation
How does the premium mode affect the total premium paid for insurance for the year?
Higher frequency of payments will result in higher overall premium
What type of report provides information about an applicant's hobbies, habits, and financial status?
Investigative consumer report
Mortality tables are used by insurance companies to predict what?
Life expectancy and death rates for specific groups of individuals
What type of insurance creates an immediate estate
Life insurance
What is included in Part 2 of a life insurance application?
Medical information about the prospective insured
All other factors being equal, which premium payment mode would require a higher overall premium: monthly or annual?
Monthly
What are the three factors that determine the premium for a particular life insurance policy?
Mortality, interest, expense
Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?
No, advertising the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by the insurer is an illegal business practice
What are the three main instances when insurable interest exists in life insurance?
Own life, life of a family member, life of business partners, or someone who has a financial obligation to Policyowner
What type of life insurance offers an applicant a cash value element
Permanent
What document describes the specific information about a policy?
Policy summary
Who must have insurable interest in the insured?
Policyowner
What term describes the fee a person pays an insurance company to receive coverage?
Premium
What is the term that describes the frequency and amount of the premium payment
Premium mode
What are illustrations in a life insurance policy?
Presentations of non guaranteed elements in the policy
What is the main responsibility of a company's underwriting unit?
Risk selection
What are the personal uses of life insurance?
Survivor protection, estate creation and conservation, cash accumulation and liquidity
