PHP Ch. 2
If a policy includes a free-look period of at least 10 days, the Buyer's guide may be delivered to the applicant no later than -
With the policy
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
What applicant can the insurer charge a higher rate of premium and not violate regulations of unfair discrimination?
Applicant who is a smoker
Which is the basic source of information used by the company in the risk selection process?
Application
When does a full premium policy coverage become effective?
As of the application date
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?
Attending Physician Statement
In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits?
Blackout period
What is true about concerning buy-sell agreements?
Buy sell agreements are normally funded with a life insurance policy
What describes a legal document that would indicate who can buy a deceased partner's share of a business and for what amount?
Buy-sell-agreement
What is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
Buyer's Guide
All of the following are duties and responsibilities of producers at the time of application EXCEPT -
Change any incorrect statement on the application by personally initiating next to the correct statement
If an applicant for a life insurance policy is found to be a substandard risk, what will the insurance company do?
Charge a higher premium
which of the following would be the beneficiary in credit life insurance?
Creditor
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT -
Erase the incorrect answer and record the correct answer
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, what is it called?
Executive bonus
An insurer has placed a notice on its advertising stating that its policies are protected by Life and Disability Insurance Guaranty is -
Illegal: insurers cannot advertise protection fund
The Medical Information Bureau (MIB) was created to protect -
Insurance companies from adverse selection by high risk persons
All advertisements are the responsibility of the -
Insurer
What is NOT true regarding HIV testing for life insurance purposes?
Insurers are barred from requesting HIV testing
What is the purpose of a conditional receipt?
It is intended to provide coverage n a date prior to the policy issue
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of the issuance of the policy
What is usually true of a participating life insurance policy?
It pays dividends to policy owners
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. What is true about the policy premium?
It will likely be higher because the applicant is a substandard risk
A married couple own a permanent policy which covers both of their lives and pays death benefit only upon the death of the first insured is what policy?
Joint Life Policy
What would be the best option to help the surviving spouse of the insured to put her child through daycare after the insured's death?
Life insurance proceeds
A policy that requires to pay premiums for a specific number of years until the policy is paid up is what kind of policy?
Limited-pay-life
What is NOT a factor that an underwriter could use to select and classify risk?
National origin
An applicant wants to buy a policy that has a cash value element. Which type should they buy?
Permanent
When a replacement is involved, a replacing insurance company is responsible for all EXCEPT -
Provide a copy of the important notice regarding replacement of life insurance to the applicant
To sell variable life insurance policies, an agent must receive all of the following EXCEPT -
SEC registration
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
Signed waiver of premium
Which of the following types of risk will result in the highest premium?
Substandard risk
What would provide an underwriter with information concerning an applicant's health history?
The Medical Information Bureau
A corporation is the owner and beneficiary of the key person life policy benefit, then -
The benefit is received tax free
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
All of the following are true about a decreasing term policy EXCEPT -
The payable premium amount steadily declines throughout the duration of the contract
For what reason may a life insurance producer backdate a life insurance policy?
To avoid an increase in premium rate for the insured
What is the best reason to purchase insurance rather than annuities?
To create an estate
When would a 20-pay whole life policy endow?
When the insured reaches age 100
An adjustable life policyowner can change what?
the coverage period
An insurer has asked an applicant to take an HIV test. How long does the applicant have to decide to sign the consent form?
10 days
How long does the applicant have to decide wether or not to sign a consent form if asked by insurer to take HIV test?
10 days
What is the maximum amount of time an application may be backdated?
6 months
When an investor buys a life policy on an elderly person in order to sell it for a settlement is called?
A STOLI policy
A straight life policy has what type of premium?
A level annual premium for the life of the insured
What documents includes premium amounts, cash values, surrender values, and death benefits for specific policy years?
A policy summary
An insured has a life insurance policy with a face amount of $500 and pays premium each week to agent who sold the policy. What kind of policy is this?
Industrial life
Stranger-orientated life insurance policies are in direct opposition to the principle of -
Insurable interest
Stranger-originated life insurance policies are direct opposition to the principle of -
Insurable interest
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?
Jumping juvenile policy
An applicant who receives a preferred risk classification qualifies for -
Lower premiums than a person who receives a standard risk
When an applicant purchased a life insurance policy, the agent dated the application 4mo prior, when asked about the applicant the agent said he was allowed to backdate policies up to 6mo if it would -
Lower the insured's premium
What is NOT included about the applicant in the General Information section of the application for insurance?
Medical background
What describes the specific information about a policy?
Policy. summary
What is included in a policy summary?
Premium amounts and surrender values
The insurance company underwriter could find information concerning the PERSONAL ACTIVITIES and CHARACTER of an applicant from which of the following reports?
Producer's report
Which rule would apply if an agent knows an applicant going to cash an old policy and the funds to purchase a new insurance?
Replacement rule
A man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that his policy -
Required a premium increase each renewal
A producer is helping a married couple determine the financial needs of their children if one or both of them die. This use of insurance is known as?
Survivor protection
Which of the following is called a "second-to-die" policy?
Survivorship life
What is true about group life?
The cost of coverage is based on the ratio of men and women in the group
Who is the owner and beneficiary on a Key Person Life Insurance policy?
The employer is the owner AND beneficiary
What does NOT fall into the category of costs associated with death?
The expense of a vacation for surviving family members
Individuals banding together to form a small group to qualify for group life insurance and get rejected is due to?
The purpose of the group was to purchase life insurance
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspect of the contract
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
What would be least likely to be considered a legitimate need that would be paid by insurance company?
Vacation travel expenses
Which of the following would LEAST likely be considered a legitimate need that would be paid by insurance proceeds?
Vacation travel expenses
Which of the following types of policies allows for flexible premium and variable investment component?
Variable universal life insurance
What is the best option when under a life insurance policy and with 6mo to live and increase on medical expenses?
Viatical settlement
