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Insurance > Life Insurance Basics (flash cards)- ExamFX > Flashcards

Life Insurance Basics (flash cards)- ExamFX

1
Q

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

A

No

-advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice

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2
Q

What is insurance underwriting?

A

The process of risk selection and classification

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3
Q

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

A

The employer

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4
Q

Mortality tables are used by insurance companies to predict what

A

Life expectancy and the death rates for specific groups of individuals

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5
Q

What is the purpose of insurance guaranty association?

A

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

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6
Q

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

A

At the time of policy delivery

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7
Q

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

A

Mortality, interest and expense

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8
Q

What document describes the specific information about a policy?

A

Policy summary

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9
Q

What does liquidity mean in a life insurance policy?

A

Availability of cash value

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10
Q

Who must have insurable interest in the insured?

A

The policyowner

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11
Q

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

A

Permanent insurance (usually, whole life)

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12
Q

What are the personal uses of life insurance?

A

Survivor protection, estate creation and conservation, cash accumulation and liquidity

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13
Q

What are illustrations in a life insurance policy?

A

Presentations of nonguaranteed elements of the policy

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14
Q

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

A

Premium

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15
Q

What type of insurance creates an immediate estate?

A

Life insurance

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16
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

17
Q

When must insurable interest exist in a life insurance policy?

A

At the time of application

18
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

19
Q

Who must be a member of insurance guaranty associations?

A

All insurers authorized to write insurance within a state

20
Q

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

A

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

21
Q

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

A

Investigative consumer report

22
Q

Who is responsible for the contents of insurance advertisements?

A

The insurance company

23
Q

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

A

Monthly

24
Q

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

A

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

25
Q

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

A

Premium mode

26
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 conversation

27
Q

What is the purpose of key person insurance?

A

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

28
Q

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

A

Insuring your own life, the life of a family member, or the life of a business partner or someone who has a financial obligation to the policyowner

29
Q

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

A

Medical information about the prospective insured

30
Q

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

A

The insured’s current assets, liabilities and survivor’s needs

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

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

A

It will decrease

33
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)

34
Q

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

A

Risk selection

Insurance (20 decks)

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