9 - Other Life Topics 2

Question 1

_________ is a term that means there must be a potential for financial loss if death, injury, sickness or loss of property occurs to the insured or a beneficiary.

Answer 1

-Insurable Interest

Question 2

individuals have an _____ insurable interest in their own lives or property.

Answer 2

-unlimited

Question 3

Insurers normally require that a designated beneficiary have an _______ in the life of the insured at the time of application for life insurance.

Answer 3

-insurable interest

Question 4

Concealment

Answer 4

-the intention to withhold or hide information by the policy-owner or the insured

Question 5

Impersonation (AKA False Pretenses) is the act of assuming the name or identity of another person with the intentions of committing a _____.

Answer 5

-fraud

Question 6

Adhesion

Answer 6

-“take it or leave it basis”

Question 7

Indemnity

Answer 7

-compensation for a loss

Question 8

Aleatory

Answer 8

-the values exchanged in the contract are not equal between the parties to the contract

Question 9

The following two (2) methods have been used to compare the relative costs of a life insurance policy:

Answer 9

• Traditional Net Cost

- Interest Adjusted Cost

Question 10

Traditional Net Cost

Answer 10

1. add premiums together for the period of years in consideration
2. subtract the projected cash value and dividends
3. divide by the number of years under consideration

Question 11

Interest Adjusted Cost

Answer 11

Traditional Net Cost w/ Interest added

Question 12

If the policy develops dividends then the value of the dividends must be subtracted from the ______

Answer 12

-net cost

Question 13

The Producer is often referred to as the _________

Answer 13

-Field Underwriter

Question 14

In life insurance insurable interest must exist only when the ___________. After the policy is issued insurable interest does not need to exist.

Answer 14

-application is taken

Question 15

The Traditional Net Cost Method does not take into account which of the following?

Answer 15

-Interest

Question 16

The Attending Physician’s Statement (APS) is submitted to the insurer from:

Answer 16

-personal doctor of the applicant

Question 17

J is asked about a specific medical condition when applying for a life insurance policy. J denied that he had the medical condition even though he was recently diagnosed with the condition. J has committed which of the following?

Answer 17

-concealment

Question 18

E gave a deliberate false statement on an application for a life insurance policy. E has committed which of the following?

Answer 18

-misrepresentation

Question 19

J surrenders a Whole Life insurance policy and receives a lump-sum cash payment of $45,000. His premium payments amounted to $39,000. Which of the following statements about taxation is correct?

Answer 19

-$39,000 tax free and will be taxed on $6,000

Question 20

To be put back in the financial position he or she enjoyed before the loss refers to which of the following legal concepts?

Answer 20

-Indemnity Contract

Question 21

Which of the following is NOT required to determine the net cost of a life insurance policy?

a. Premiums
b. cash value
c. insurer expense charge
d. dividends

Answer 21

c. insurer expense charge

Question 22

J has $25,000 cash value in a life policy and has paid $9,000 in premiums and borrows $10,000 from the policy. What portion would be potentially taxable for the current tax year on the loan?

Answer 22

-nothing

Question 23

At the time of application who is responsible for providing information to an applicant that a medical exam is required?

Answer 23

-producer taking the application