Life insurance basics questions Shae

Return to the applicant for completion

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application?

Executive bonus.

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Issue the policy that is requested.

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT

With the policy.

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

The producer

Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly?

The policy is owned by the company.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

As of the application date

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

The seller must be terminally ill.

Which of the following is NOT true of life settlements?

Loss of the owner's income.

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT

They are usually qualified plans.

Which of the following statements regarding deferred compensation funds is INCORRECT?

Rent.

If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT

The policy will be interpreted as if the insurer waived its right to have an answer on the application.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

Premiums are not tax deductible as a business expense.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Buy-sell agreements are normally funded with a life insurance policy.

Which of the following statements concerning buy-sell agreements is true?

The cash value available to the policyowner

Which of the following is an example of liquidity in a life insurance contract?

Conservation.

A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called

Reports may be sent to anyone who requests one.

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT

Premium amounts and surrender values

Which of the following will be included in a policy summary?

To help the insured understand all aspects of the contract

Why should the producer personally deliver the policy when the first premium has already been paid?

Family Dependency Period.

A family's need for income is greatest during the

Business Continuation

Joe, Larry, and Curly own a small business. They have made a legal arrangement which states that if one of them dies or becomes disabled, the other two will be able to buy the partner’s shares. Which term best describes this arrangement?

Inspection Report

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

The expense of a vacation for surviving family members

Which of the following would NOT fall into the category of costs associated with death?

Signed waiver of premium.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE?

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

Charge a higher premium.

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

The employer is the owner and beneficiary.

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

The producer must provide the applicant with a Notice Regarding Replacement.

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

Selection, classification, and rating of risks

Which of the following best details the underwriting process for life insurance?

Executive is the owner, and the executive pays the premium.

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

$2,500

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

Lower premiums than a person who receives a standard risk.

An applicant who receives a preferred risk classification qualifies for

It gives the applicant immediate coverage.

What is an advantage of the Temporary Insuring Agreement to the applicant?

Application

Which is the primary source of information used for insurance underwriting?

The medical portion of an application that asks for medical information but does not require a medical exam

Which of the following best describes a nonmedical application?

Fair Credit Reporting Act

An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?

Disputes regarding consumer report information.

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT

To explain features and benefits of a proposed policy to the consumer

What is the purpose of a disclosure statement in life insurance policies?

The policy's face amount

The purchase of life insurance creates an immediate estate in what amount?

Whole life insurance

To which of the following products does the Replacement Regulation apply?

Pre-select applicants that would present the lowest risk of loss for the insurer.

The agent is known as the "field underwriter" because of the information the agent gathers for the insurer. This helps the insurer

An insurer is investigating the client’s risk profile.

The process of “post-selection” refers to which of the following?

If declined for an insurance policy, an applicant has no right to the information in the report.

According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT