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Life And Health Exam > Life Insurance Basics > Flashcards

Life Insurance Basics Flashcards

1
Q

Who is the beneficiary on a key-person life insurance policy?

A

The employer

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2
Q

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

A

No this is an illegal business practice

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3
Q

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

A

1 mortality

2 interest

3 expense

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4
Q

What are the personal uses of life insurance?4

A

1 survivor protection
2 estate creation and conservation
3 cash accumulation
4 liquidity

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5
Q

Who must be a member of insurance guarantee associations?

A

All insurers authorized to write insurance within a state

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6
Q

What is the term that describes the frequency and amount of the premium payment?

A

Premium mode

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7
Q

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

A

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

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8
Q

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

A

It will decrease

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9
Q

What is the main responsibility of a company’s underwriting unit?

A

Risk selection

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10
Q

When planning for survivor protection in life insurance, what needs to be considered?

A

The insured’s current assets, liabilities and survivors needs

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11
Q

What are illustrations in a life insurance policy?

A

Presentations of non guaranteed elements of the policy

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12
Q

Mortality tables are used by insurance companies to predict what?

A

Life expectancy and death rates for specific groups of individuals

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13
Q

What is the purpose of insurance guaranty associations?

A

To protect policy owners, insureds and beneficiaries from financial losses caused by insolvent insurers

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14
Q

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

A

Either the date of application or the date of the medical exam

(Whichever occurs last)

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15
Q

Who must have insurable interest in the insured?

A

The policy owner

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16
Q

How does the premium mode affect the total premium paid for insurance for the year?

A

Higher frequency of premium payments will result in higher overall premium

17
Q

What is insurance underwriting?

A

The process of risk selection and classification

18
Q

When must the policy summary for a life insurance policy be delivered to the policy owner?

A

At the time of policy delivery

19
Q

What term describes the fee a person pays an insurance company to receive coverage?

A

Premium

20
Q

What are the three main instances when insurable interest exists in life insurance?

A

Insuring own life

Family member

Or business partner

21
Q

What type of life insurance offers an applicant a cash value element?

A

Permanent insurance (usually whole life)

22
Q

What document describes the specific information about a policy?

A

Policy summary

23
Q

What is included in part 2 of a life insurance application?

A

Medical information about the prospective insured

24
Q

What is the purpose of the agent’s report during the application process?

A

The agent’s report discussed the agent’s personal observations about the proposed insured that may help in the underwriting process

25
Q

All other factors being equal, which premium payment mode will require an overall higher premium: monthly or annual?

A

Monthly

26
Q

What is the purpose of key person insurance?

A

To minimize risk of financial loss caused by death of key employee

27
Q

What does liquidity mean in a life insurance policy?

A

Availability of cash value

28
Q

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter’s main concern?

A

The existence of insurable interest between the applicant and the insured

29
Q

What type of insurance creates an immediate estate?

A

Life insurance

30
Q

Who is responsible for the contents of insurance advertisements?

A

The insurance company

31
Q

A business is the owner and beneficiary of a key person life policy. When the business collects the policy benefit, how is it taxed?

A

The benefit is received tax free

32
Q

When must insurable interest exist in a life insurance policy?

A

At the time of application

33
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

34
Q

Attempting to determine how much insurance an individual would require based upon financial objectives is known as…

A

Needs approach

35
Q

The medical information bureau (MIB) was created to protect…

A

Insurance companies from adverse selection by high risk persons

Life And Health Exam (40 decks)

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