Chapter 2

Question 1

What process do insurance companies use to determine whether or not a particular applicant is insurable?

Answer 1

Underwriting

Question 2

To ensure suitability of annuity products, producers must obtain relevant information about the consumers age, income, financial status, tax status, financial experience and objectives.

Answer 2

Beneficiary’s age is not a suitable factor.

Question 3

what are illustrations in a life insurance policy?

Answer 3

presentations of nonguaranteed elements of the policy

Question 4

what are the 3 factors that determine the premium for a particular life insurance policy?

Answer 4

mortality,interest, and expense

Question 5

in calculating the amount of life insurance needed, what is the needs approach based on?

Answer 5

The predicted needs of the family after the premature death of the insured

Question 6

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

Answer 6

It will decrease.

Question 7

another name for substandard risk classification

Answer 7

rated.

Question 8

a key person insurance policy:

Answer 8

pays for costs of running the business and costs of training and replacing the employee

Question 9

Key person coverage

Answer 9

funded by any type of life insurance

Question 10

the producer

Answer 10

delivers policy

Question 11

the application is the basic source of information in the?

Answer 11

risk selection process

Question 13

Purpose of a conditional receipt

Answer 13

To provide coverage on a date prior to the policy issue

Question 14

Not an example of a valid insurable interest

Answer 14

Debtor in the life of the creditor