Life Insurance Basics Flashcards
T/F
Insurable interest must exist at the time of application, but not necessarily at the time of a claim.
True
Insurable interest may be based on…
Economics or family relationships
An insurable interest exists if…
Someone would benefit if another person continues to live.
Buying a life insurance policy creates…
An immediate estate.
When life insurance is used to pay estate taxes it is known as…
Estate conversion
A life settlement contract is between…
the life insurance policyowner and a third party.
The human life value approach was created to establish…
what a family would lose in income upon
the death of the sole or chief income provider.
T/F
The needs approach to life insurance considers future earnings.
False: it does not consider future earnings
T/F
Stockholders in small, privately held closed corporations often enter into buy/sell agreements
with the corporation that are funded by life policies.
True
A policy that provides for business continuation in the event that a business partner dies is based
upon a…
Cross-purchase buy/sell agreement.
T/F
A corporation may buy a policy on a shareholder to provide for stock redemption in the event of
the shareholder’s death.
True
T/F
When life insurance is purchased as an executive bonus for a corporate employee, the policy
belongs to the employee.
True
Life insurance premiums are based on…
mortality (death) plus company expenses minus interest
earned on company investments.
Agents (producers) are also known as
field underwriters.
• If a producer gives an applicant a conditional receipt and the underwriter rejects the application…
there is no coverage.
