Types of Insurance Policies

Question 1

The Buyer’s Guide to Life Insurance provides basic information concerning all of the following, except:
A
The interest rates of the different policies which are sold
B
The different types of policies which are sold
C
The comparative costs of the different types of policies which are sold
D
Life insurance

Answer 1

A

The interest rates of the different policies which are sold

Question 2

Which one of the following will pay the highest premium for a life insurance policy all other factors being equal?
A
Male age 65
B
Female age 70
C
Male age 70
D
Female age 65

Answer 2

C

Male age 70

Question 3

Constructive or legal delivery occurs only if the premium was paid at the time of:
A
Policy delivery 
B
Illustration
C
Solicitation
D
Application

Answer 3

D

Application

Question 4

Which of the following personal uses of life insurance is specifically designed to provide benefits to the policyowner while the insured is still alive?
A
Estate conservation 
B
Charitable bequests
C
Cash accumulation
D
Estate creation

Answer 4

C

Cash accumulation

Question 5

Which of the following best describes a Statement of Good Health?
A
It is a sworn oral statement made by the insured at time of delivery which allows for coverage to come into effect
B
It is what comes along with the policy at the time of delivery confirming the underwriting class the insured falls into if the policy was issued standard or better
C
It is the producer’s authority to raise the rate if the insured does not appear to be in good health at the time of policy delivery
D
It verifies that the insured has not suffered a serious illness or injury requiring surgery or hospitalization since the application date

Answer 5

D

It verifies that the insured has not suffered a serious illness or injury requiring surgery or hospitalization since the application date

Question 6

Premiums paid in advance are considered what type of premiums until coverage has been provided?
A
Unearned
B
Residual
C
Earned
D
Deposit

Answer 6

A

Unearned

Question 7

In order to receive a policy dividend, the policy owner must own a \_\_\_\_\_\_\_\_\_\_ policy.
A
Ordinary
B
Group
C
Participating
D
Industrial

Answer 7

C

Participating

Question 8

If a basic life insurance illustration is used by an insurance producer in the sale of life insurance and the policy is applied for as illustrated, a signed copy of that illustration must be submitted to the insurer and provided to the applicant:
A
At the time of policy application
B
At the time of policy delivery 
C
At the first policy anniversary 
D
At the end of the free look period

Answer 8

A

At the time of policy application

Question 9

In determining the proper amount of life insurance, the Needs Analysis Approach takes into consideration all of the following factors, except:
A
The projected future value of services provided by the insured
B
The payoff of any outstanding mortgage balance
C
The paying off of personal debts, medical bills, and final expenses
D
The creation of college funds for surviving children

Answer 9

A

The projected future value of services provided by the insured

Question 10

What type of a receipt provides immediate coverage during the underwriting period (rather than a specified number of days) until a policy is issued or the application is declined?
A
Conditional
B
Guaranteed
C
Trial
D
Temporary insurance agreement

Answer 10

D

Temporary insurance agreement

Question 11

The Medical Information Bureau (MIB) is formed by:
A
Medical professionals
B
Employers
C
The Government
D
Insurance companies

Answer 11

D

Insurance companies

Question 12

Regarding insurable interest which one of the following is false?
A
An individual has an insurable interest in his or her own self
B
An insurable interest exists in cases where a financial or economic loss by the insured results in the event that the policy owner dies
C
A parent has an insurable interest in his/her son or daughter
D
A creditor has an insurable interest in one of their debtors

Answer 12

B
An insurable interest exists in cases where a financial or economic loss by the insured results in the event that the policy owner dies

Question 13

Which of the following best describes producer field underwriting?
A
Conducting blood pressure readings, taking the applicant’s pulse, and drawing blood
B
Taking the time to probe beyond the stated questions on the application based upon the applicant’s responses
C
Interviewing the applicant’s neighbors about the applicant’s morals and character
D
Obtaining the applicant’s medical records, conducting a credit history check, and logging in to the MIB

Answer 13

B

Taking the time to probe beyond the stated questions on the application based upon the applicant’s responses

Question 14

In California, in a replacement situation, it is recommended that an existing policy not be terminated until:
A
The existing policy has been in force for at least 5 years
B
The application for the replacing policy has been completed
C
The existing policy has been in force for at least 10 years
D
The replacing policy is issued and delivered

Answer 14

D

The replacing policy is issued and delivered

Question 15

Every insurer and life agent offering for sale individual life insurance policies, or individual annuity contracts that are issued for delivery to senior citizens in California with the use of non-preprinted illustrations of non-guaranteed values must disclose on those illustrations, or on an attached cover sheet, which one of the following statements?
A
Make sure that you are dealing with a licensed agent/producer who has a professional industry recognized designation
B
This illustration is unique in that it is custom designed to meet your particular needs and objectives so comparisons with other company’s policies is not recommended
C
This is an illustration only which is not intended to predict actual performance, therefore interest rates, dividends, or values that are contained herein are not guaranteed, except for those items clearly labeled as guaranteed
D
Contact the Insurance Commissioner to find out what the actual performance of similar policies have been in the past

Answer 15

C
This is an illustration only which is not intended to predict actual performance, therefore interest rates, dividends, or values that are contained herein are not guaranteed, except for those items clearly labeled as guaranteed

Question 16

If after a policy has been issued and delivered, the insurer discovers unanswered questions on the application, what can the insurer legally do at this point?
A
Require the applicant/insured to answer the questions and re-underwrite the policy
B
Cancel the policy
C
Increase the policy’s premium
D
Nothing, the insurer has waived its right to that information

Answer 16

D

Nothing, the insurer has waived its right to that information

Question 17

Life insurance applications cannot contain questions about prior HIV testing unless the question is limited to prior testing for the purpose of obtaining:
A
A gun permit 
B
Insurance
C
Employment
D
A drivers license

Answer 17

B

Insurance

Question 18

Interest earned on premiums paid to an insurer helps to \_\_\_\_\_\_\_\_ the premiums charged.
A
Lower
B
Standardize
C
Stabilize
D
Increase

Answer 18

A

Lower

Question 19

Any attempt by the existing insurer or agent to deter a policyowner from the replacement of an existing life insurance or an annuity is called:
A
Servicing
B
Intimidation
C
Anti-consumerism 
D
Conservation

Answer 19

D

Conservation

Question 20

What should the producer do, if the insured is in the hospital with a heart condition pending surgery on the day the newly issued policy was to be delivered and initial premium collected?
A
Hold onto the policy until the insured is discharged from the hospital and then deliver the policy
B
Collect additional premium at the time of delivery to reflect the higher risk the insurer now faces
C
Return the policy to the insurer with a letter of explanation
D
Deliver the policy to an immediate family member and collect any outstanding premium

Answer 20

C

Return the policy to the insurer with a letter of explanation

Question 21

When the initial premium is not paid with the application, what must the producer do before coverage can begin?

A
Collect and submit the outstanding premium to the insurer within the free look period
B
Deliver the policy if it is issued and obtain a policy delivery receipt
C
Collect the premium and obtain a signed Statement of Good Health from the applicant/insured at time of policy delivery
D
Obtain a signed State of Good Health and policy delivery receipt from the applicant/insured when the policy is delivered

Answer 21

C

Collect the premium and obtain a signed Statement of Good Health from the applicant/insured at time of policy delivery

Question 22

If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a:
A
Statement of Release
B
Notice of Conservation
C
Notice of Replacement
D
Cancellation of Service

Answer 22

C

Notice of Replacement

Question 23

The Attending Physician’s Statement (APS) is completed by:
A
A physician providing a required medical exam at the time of application
B
The Medical Information Bureau
C
An applicant’s physician to provide information about the applicant’s medical history
D
The agent after the medical questions are answered by the applicant

Answer 23

C

An applicant’s physician to provide information about the applicant’s medical history

Question 24

In California, every person has an insurable interest in the life and health of all of the following, except:
A
Any person under a legal obligation to him for the payment of money or respecting property or services, of which death or illness might delay or prevent the performance
B
Any person who agrees to be insured
C
Any person on whom he/she depends wholly or in part for education or support
D
Himself/herself

Answer 24

B

Any person who agrees to be insured

Question 25

Normally, when the insurer determines that the insured is an acceptable risk, the insurer will send the policy to the \_\_\_\_\_\_\_\_\_\_\_\_.
A
Producer
B
Policyowner
C
Insured
D
Beneficiary

Answer 25

A

Producer

Question 26

Ultimately it is up to the \_\_\_\_\_\_\_ to determine if the proposed insured is an acceptable risk.
A
Home office underwriter
B
Field underwriter
C
Insured's primary care physician
D
Home office actuary

Answer 26

A

Home office underwriter

Question 27

If premiums were submitted at the time of application, when is a life insurance policy considered constructively or legally delivered by the insurer?
A
At the time the producer receives the rated policy and is required to collect additional premiums
B
Once the producer delivers the policy to the applicant and obtains a signed delivery receipt
C
Once the insurer mails the issued as applied for policy to the producer
D
At the time of application if premiums were collected and a conditional coverage receipt was issued by the producer

Answer 27

C

Once the insurer mails the issued as applied for policy to the producer

Question 28

Which of the following is not a factor in premium determination?
A
Reserves
B
Mortality
C
Expenses
D
Interest

Answer 28

A

Reserves

Question 29

Before the process of underwriting begins, who will make the final determination as to whether insurable interest exists?
A
The agent 
B
The underwriter 
C
The applicant 
D
The insured

Answer 29

B

The underwriter