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Life Exam > Life Insurance Basics > Flashcards

Life Insurance Basics Flashcards

1
Q

Insurable interest must exist when?

A

At the time of application

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2
Q

The _____ must have Insurable interest in the life of the _______.

A

Policy owner, insured

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3
Q

Insurable interest is or is not required of beneficiaries?

A

Is not

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4
Q

Allows the policy owner to borrow against the cash value of their policy

A

Liquidity

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5
Q

Calculated by looking at insureds wages, inflation, the amount of years to retirement, and the time value of money

A

HLVA - Human Life Value Approach

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6
Q

Based on predicted need of the family following an insureds death

A

Needs Approach

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7
Q

Which approach looks at income, debts, expenses, investments, etc to base life insurance values on.

A

Needs approach

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8
Q

Time during which a surviving spouse and/or children do not receive social security survivor benefits.

A

Social security blackout

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9
Q

SS Blackout period starts when the youngest child turns __ and ends when the qualifying spouse qualifies for _________ benefits, as early as age __

A

16, retirement, 60

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10
Q

Can a business take a tax deduction on premium paid for key employee insurance.

A

No

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11
Q

Are key employee benefits taxable.

A

No

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12
Q

Buy-sell agreement is also known as

A

Business continuation agreement

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13
Q

Buy-sell agreement when used in partnerships when each partner buys a policy on the other;

A

Cross purchase

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14
Q

Buy-sell used when the partnership buys the policies on the partners;

A

Entity purchase

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15
Q

Buy-sell used by privately owned corporations when each stockholder buys a policy on each of the others; and

A

Stock purchase

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16
Q

Buy-sell when the corporation buys one policy on each shareholder.

A

Shareholder

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17
Q

Where the employer gives a wage increase to an employee to cover a life insurance premium. This is considered a irs ______________ plan because it is not subject to plan limits issued by the irs. Since the employer treats the premium as a bonus it is ______ ______ and paid benefits are —— to the employee

A

Executive bonuses, nom-qualified, tax deductible, taxable

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18
Q

Every applicant of life insurance must be given a _____ ______ at or no later than the time of application.

A

Disclosure statement

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19
Q

Insurers must provide a ____________ to all prospective policy applicants prior to accepting their initial premium.

A

Buyers guide

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20
Q

If the policy contains an unconditional refund provision of at least __ days (free-look period), a buyer’s guide can be delivered with the policy

A

10

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21
Q

a written statement describing the features and elements of the policy being issued

A

Policy summary

22
Q

A ___________ provides generic information on various types of policies. A __________ provides specific information on the policy being issued.

A

Buyers guide, policy summary

23
Q

the process in which an insurance company determines whether or not a particular applicant is insurable, and if so, what premium to charge.

A

Underwriting

24
Q

The _______ is the companies field underwrite.

A

agent

25
Q

the agent’s personal observations concerning the proposed insured.

Does or does not become part of entire contract?

A

The agents report - does not

26
Q

If a question on an app is left unanswered The insurer will or won’t have the right to deny coverage based on any information that the unanswered question might have contained.

A

Won’t

27
Q

Whenever the agent collects premiums, the agent must issue a _____

A

Premium receipt

28
Q

receipt that says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

A

Conditional

29
Q

Conditional receipt means the applicant may be covered as early as when?

A

Date of application

30
Q

______ is the key source underwriters use for information about the applicant.

A

Insurance application

31
Q

Insurers ______ refuse coverage solely on the basis of adverse information on an MIB report.

A

Cannot

32
Q

What - what = net premium

A

Mortality - interest

33
Q

The one year cost for mortality plus the cost of operating the company (expense loading)

A

Gross premium

34
Q

Higher payment frequency equals _______

A

Higher premiums, to account for administrative costs and interest

35
Q

Using life insurance proceeds to cover estate taxes

A

Estate conservation

36
Q

A policy summary is sometimes called an ———-

A

Illustration

37
Q

What type of report provides information about the applicant’s hobbies, habits and financial status?

A

Investigative consumer report

38
Q

Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called?

A

Estate conservation

39
Q

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?

A

Either on the date of the application or the date of the medical exam (whichever occurs last

40
Q

What are the three factors that determine the premium for a particular life insurance policy?

A

Mortality, interest and expense

41
Q

Presentations of nonguaranteed elements of the policy

A

Illustrations

42
Q

Survivor protection, estate creation and conservation, cash accumulation and liquidity are all examples of..

A

What are the personal uses of life insurance?

43
Q

If initial premium is not paid at time of application the agent will collect premium when, and the applicant will most likely need to fill out what?

A

At time of policy delivery; a statement of good health

44
Q

Agents may backdate policies up to __ months in order to obtain a better premium for an insured.

A

6

45
Q

T/F: there is no limitation on the number of key employee plans in force at any one time.

A

True

46
Q

The ___________ is the owner, payor, and beneficiary of a key employee policy.

A

Employer

47
Q

The __________ is the insured in a key employee policy.

A

Employee

48
Q

T/F: key person coverage may be funded by any type of life insurance.

A

True

49
Q

When an individual policy or annuity is delivered by hand to the policy owner, a ____________ must be signed.

A

Delivery receipt

50
Q

Provides specific info about the issued policy, insurers info, and generic info that allows for comparison of costs on different policies.

A

Buyers guide

51
Q

Attempting to determine how much insurance a family would require based upon their financial objectives is known as

A

Needs approach

Life Exam (9 decks)

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