Review Questions
What kind of life insurance policy covers two or more people with the death benefit payable up on the last person's death
Last survivor life insurance
The authority granted to a licensed producer is provided via the
Law of agency
Insurance companies determine risk exposure by which of the following Insurable interest Insurance exchange Population table data Large number and risk pooling
Law of large numbers and risk pooling
Which contract element is insurable interest a component of
Legal purpose
Which of these is not considered to be a common life insurance nonforfeiture option
Life income annuity
A limited payment whole life policy provides
Lifetime protection
A permanent life insurance policy where the policy owner pays premiums for a specified number of years is called a
Limited pay policy
The examples are examples of pure risk except Losing money at the casino injured while playing football Falling at a casino and breaking a hip Jewelry stolen during a Home robbery
Losing money while at the casino
Joanne has a $100,000 whole life policy within accumulated $25,000 of cash value she would like to borrow 15,000 against the cash value which of the following statements is true
Net death benefit will be reduced if the loan is not repaid
A provision in a whole life policy that allows a policy owner to terminate the policy in return for a reduced paid up policy of the same type is called Bay
Nonforfeiture provision
A provision that allows a policy owner to withdraw policies cash value interest free is a
Partial surrender
What is the immediate specific event causing loss and giving rise to risk Peril Hazard Loss factor Liability
Peril
What is an insurance policies Grace period
Period of time after the premium is due but the policy remains in force
Variable life insurance and universal life insurance are very similar which of these features are held exclusively by variable life insurance
Policy owner has the right to select the investment which will provide the greatest return
Which of these describes the results of a modified endowment contract that failed to meet the seven pay test
Predeath distributions are typically taxable
Under modified endowment contract what are the likely tax consequences
Predeath distributions will become taxable
The fair credit and reporting acts main purpose it to assist in the underwriting of insurance policies Protecting church from an applicants misrepresentation Protect consumers with guidelines regarding credit reporting and distribution Assist in an insurer and determining an applicants credit worthiness
Protect consumers with guidelines regarding credit reporting and distribution
Decreasing term life insurance is often used to
Provide coverage for a home mortgage
Policy owner my exes exercise which of these dividend options that uses dividends to pay all or part of the next premium do
Reduction of premium dividend option
Curl is an active duty service man who was recently killed in an accident while Homan leave which military service exclusion Claus would pay upon his death
Results
A life insurance policy owner does not have the right to
Revoking absolute assignment
Which of the following are the premium payments for a universal life policy not used for
Separate account investments
The statements which best describes the pay the relationship between the premiums of a whole life policy and the premium payment period is
Shorter the payment period. The higher the premium
In an insurance contract the applicants consideration is the
Statements made in the application and the premium
What does the word level and level town describes
The Face amount
Chrissa purchases a 10 year level term life insurance policy that has a death benefit of $200,000 which of these statements is true
The face I'm out in premium auto remains same over the 10 year period
The insured individual in the policy beneficiary died from the same accident the common disaster provision states that the insurer will continue as if
The insured outlived the beneficiary
If an insured dies during the grace period with no premiums paid
The policy would be payable minus the premium amount
the do not call registry offers exemptions for called placed from all of the following except charities political organizations insurance sales calls surverys
insurance sales calls
ambiguities in an insurance policy are always resolved in favor of the insured producer insurer underwriter
insured
Insurers predict the increase of individual risk Law of large numbers US census Average mortality incidents experience
law of large number
what kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus nonparticipating life insurance policy participating LI policy divisible surplus LI policy straight LI policy
participating
the cause of a loss is referred to as hazard adversity peril risk
peril
The principle of a most good faith the insured will answer questions on the application to the best of their knowledge and pay the required premium well then sure will deal fairly with the insured and it's underwriting issurance of the policy promises made legal reserve
promises made
What is considered to be the primary reason for buying life insurance? provide death benefits provide money for retirement provide living benefits provide money for college
provide death benefits
what Are an applicant statements concerning occupation hobbies and personal health history regarded as warranty guarantee representation collateral
representation
And insurance claims settlement practices are regulated by SEC NACA NAIC state insurance department
state insurance department
a _______ company is owned by its shareholders
stock
a nonparticipating company is sometimes called a alien insurer mutual insurer reinsurer stock insurer
stock insurer
under a contract of adhesions, there is potential for an unequal exchange of value the insurer's obligations are dependent upon certain acts of the insured individual the terms must be accepted or reject in full only one party make any kind of enforceable promise
terms must be accepted or rejected in full
Insurance represents the process of risk selection avoidance transference assumption
transference
What is implied authority defined as
Authority that is not specifically given to an agent in the agency contract but that an agent can reasonably assume to carry out his or her duties
Rob purchases a standard whole life policy with a $500,000 bet death benefit when he was 830 his insurance agent told him the policy would be paid up if he reached the age 100 the present cash value of the policy equals $250,000 Rob recently died at age 60 the death benefit would be
$500,000
Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken? 1000 3000 5000 7000
5000
Which of the following best describes a conditional insurance contract
A contract that requires certain conditions are asked by the insured individual
Policy feature makes a universal life policy different from my whole life policy
A flexible premium schedule
A modified endowment contract is best described as
A life insurance contract which accumulates cash value is higher than the IRS will allow
Hey single premium cash value policy can be described as
A policy that is paid up after only one payment
A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called -self derived plan -multiple employer plan -blanket plan -self funded plan
A self funded plan
Which of the following is considered to be an alternative to a life settlement
Accelerated death benefit rider
A renewable term life insurance policy can be renewed
Add a predetermined date or age regardless of the insurance health
A policy owner may change to policy features on what type of life insurance
Adjustable life
What is the purpose for having an accelerated death benefit on a life insurance policy
Allows for cash advances to be paid against the death benefit if the insured becomes terminally ill
According to life insurance contract law insurable interest exist
At the time of application
You're a group life policy their insurer will issue and individual _____________ to the policy owner for delivery to each person insured
Certificate
All of the following are elements of an insurance policy except
Claim forms
A provision that allows a policy owner to temporary give up ownership rights to secure a loan is called
Collateral assignment
Ownership of a life insurance policy may be temporary transferred with
Collateral assignment
In an insurance contract the element that shows each party is giving something of value is called
Consideration
Which type of clause describes the following statement we have issued the policy in consideration of the representation in your application and payment on the first term premium
Consideration clause
It's not an element of a valid contract
Counter signature
Happens to coverage under a children's term rider when that child reaches a certain specified age
Coverage is eliminated
In what part of an insurance policy or policy benefits found
Declaration
The least expensive option to pay off a 30 year mortgage balance would be
Decreasing term life
Example of risk sharing would be Adding more security to a high-risk building Choosing not to invest in the stock market Doctors pulling their money to cover malpractice exposure Buying an insurance policy to cover potential liabilities
Doctors pulling their money to cover malpractice exposure
Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
Endowment policy
Level premium permanent insurance accumulates Arif reserve that will eventually
Equal the face value of the policy
Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contract side to ace did you laded stock index what kind of policy is this
Equity index whole life
A professional liability for which producers can be sued for mistakes of putting a policy into effect is called
Errors and omissions
Which of these writers will pay the death benefit if the insurance spouse dies
Family term insurance rider
All of these are characteristics of a universal life insurance policy except
Fix surrender value
What is a corridor in relation to a universal life insurance policy
Gap between the total death benefit in the policies cash value
A business will typically use which type of life insurance to cover their employees
Group policy
I life insurance rider that allows an individual to purchase insurance as they grow older regardless of insurability is called
Guaranteed insurability rider
The automatic premium loan provision authorizes ensure to withdraw from the policies cash value the amount of
Has to premiums that have not been paid by the end of the grace period
Julia has a $100,000.30 year mortgage on her new home what type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30 year.
Increasing tournament shirt
The conversion privilege under a group life plan allows an employee to convert a
Individual plan a bond employment termination
All of the following are characteristics of a group life insurance plan except
Individual underwriting
Which of the following is present when an applicant stands to lose value adventure dies
Insurable interest
Which of these is not considered to be a nonforfeiture option in a whole life insurance policy
Interest only
A life insurance policy written on one contract for two people in which it is payable upon the first death is called
Joint
Bob and Tom starts a business center each partner contributes an important element to the success of the business they decide to take life insurance policies out on each other and name each other as beneficiaries eventually they retire and dissolve the business Bob dies 12 months later the policies continue in force with no change both partners are still married at the time of Bob's death in the situation who will receive Bob's policy proceeds
Tom
In an insurance contract the insurer is the only party legally obligated to perform because of this an insurance contract is considered
Unilateral
A life insurance policy that contains a guaranteed interest rate with a chance to earn a rate that is higher than the guaranteed rate is called
Universal life
A life insurance policy that contains a guaranteed interest-rate with a chance to earn a higher rate than the guaranteed rate is called
Universal life
Joe has a life insurance policy that has a face amount of $300,000 after a number of years the policies cash value accumulates to 50,000 in the face amount becomes 350,000 what kind of policy is this
Universal life policy
Which type of policy combines the flexibility of a universal life policy with investment choices
Variable universal life policy
Type of life insurance offers flexible premiums are flexible death benefit and a choice of how the cash will be invested
Variable universal policy
Sean Mike and Dave are brothers who have a $100,000 first to die joint life policy covering all three of their lives if my dad's first the policy proceeds
Will no longer provide insurance coverage
A renewable term life insurance policy allows the policy owner the right to renew the policy
Without producing proof of insurability
People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called risk rentention preexisting conditions law of large numbers adverse selection
adverse selection
The term which describes the fact that both parties of a contract may not receive the same value is referred to as
aleatory
According to the life insurance contract law, insurable interest exists
at the time of application
An individual who removes the risk of losing money in the stock market by never purchasing stock is said to be engaging in Risk reduction Risk transference Risk avoidance Risk retention
avoidance
Insurable interest does NOT occur in which of the following relationships? sister and brother parent and children business partners business owner and client
business owner and customer
A waiver of premium rider allows an insured to waive premium payments if the insured is
completely and permanently disabled
Fraternal Benefit Society has each of the following characteristics EXCEPT -incorporated -without capital stock -exist for profit -exist for benefits of its members
exist for profit
When the principal gives the agent authority in writing, it's referred to as express implied apparent imposed
express
Do the following is considered to be an event or condition that increases the probability of an insured's loss risk hazard indemnity peril
hazard
