Chapter 9

Question 1

Presentations that include non-guaranteed elements of a policy are called..?

Answer 1

illustrations

Question 2

Premiums, benefits, and costs that are NOT guaranteed under a particular insurance policy are called..?

Answer 2

non- guaranteed elements

Question 3

Premiums, benefits, and costs under that are guaranteed under a particular insurance policy

Answer 3

guaranteed elements

Question 4

When you forfeit, lapse, or surrender an existing policy in order to purchase a new policy, this is called..?

Answer 4

replacement

Question 5

When the insured is covered after submitting their application and initial premium (on the condition that they are insurable) before the actual policy starts, this is called..?

Answer 5

conditional receipt

Question 6

When the insured is covered after submitting their application and initial premium (regardless of whether they are insurable) before the actual policy starts, this is called..?

Answer 6

binding receipt

Question 7

Two methods insurers use to determine the cost of a policy are..?

Answer 7

1.) traditional net cost method
2.) interest adjusted cost method

Question 8

Of the two methods insurers use to determine the cost of a policy, which method considers the time-value of money aka interest and inflation?

Answer 8

interest adjusted cost method

Question 9

Of the two methods insurers use to determine the cost of a policy, which method does not consider the time-value of money aka interest and inflation?

Answer 9

traditional net cost method

Question 10

What are 3 things illustrations cannot do?

Answer 10

1.) represent the life insurance policy as anything other than what it is
2.) use non-guaranteed elements in a misleading manner
3.) use the term “vanishing premiums” to imply that premiums are paid-up

Question 11

The agent and insurer issuing the new policy have certain duties: Provide the old insurer with a notice of _______ within 3 days and keep said notice for at least 3 years.

Answer 11

replacement