LIFE INSURANCE BASICS

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

The policy is owned by the company

Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called

Suitability.

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?

Inspection Report

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant

With the policy

A key person insurance policy can pay for which of the following?

Costs of training a replacement

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

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

Inspection Report

For what reason may a life insurance producer backdate a life insurance policy?

To avoid an increase in premium rate for the insured

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

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only

During a replacement, how long must the existing insurer maintain all notifications sent by the replacing insurer?

5 years

What describes the specific information about a policy?

Policy summary

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be condedered

An unfair trade practice.

An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information?

Present the insured with a Disclosure Authorization Notice

An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?

Fixed

All of the following are personal uses of life insurance EXCEPT

Buy-sell agreement

Which of the following best describes gross annual premium?

Net premium plus expenses

All of the following are true of key per insurance EXCEPT

The plan is funded by permanent insurance only.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer wil

Pay the policy proceeds only if it would have issued the policy.

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.

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death.

When a replacement is involved, a replacing insurance company is responsible for all of the following EXCEPT

Provide a copy of the Important Notice Regarding Replacement of Life Insurance to the applicant.

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?

The producer

What must happen when an individual policy or annuity has been personally delivered to the policyowner?

The policyowner must sign a delivery receipt.

Which of the following in NOT among the accounts that the Life and Disability Insurance Guaranty Fund maintains?

Group insurance account

Insurers are required to maintain copies of their policy summaries for at least

3 years.