What type of reinsurance contract involves two companies automatically sharing their risk exposure? - ANSWER-Treaty
The stated amount or percent of
... [Show More] liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called - ANSWER-reserves
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have - ANSWER-insurable interest
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called - ANSWER-representations
The part of a life insurance policy guaranteed to be true is called a(n) - ANSWER-warranty
Which of these is NOT a type of agent authority?
Express
Implied
Principal
Apparent - ANSWER-Principal
The Consideration clause of an insurance contract includes - ANSWER-the schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? - ANSWER-In this situation, the proceeds from E's life insurance policy will go to F.
Which term defines the legally enforceable promise in an insurance contract by the insurer? - ANSWER-Unilateral
Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. - ANSWER-conditional
Which of these require an offer, acceptance, and consideration? - ANSWER-Contract
Which of these is NOT considered to be an element of an insurance contract?
the offer
acceptance
negotiating
consideration - ANSWER-negotiating
An agent is an individual that represents whom? - ANSWER-Insurer
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - ANSWER-Variable Life
Which of the following actions require a policy owner to provide proof of insurability in an Adjustable Life policy? - ANSWER-increase face amount
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? - ANSWER-Conversion provision
What type of life insurance are credit policies issued as? - ANSWER-Term
How long does the coverage normally remain on a limited-pay life policy? - ANSWER-age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
- Cash value has a minimum rate of accumulation
- If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index
-The premiums can be lowered or raised, based on investment performance
-Tied to an equity index such as the S&P 500 - ANSWER-The premiums can be lowered or raised, based on investment performance
What type of life insurance incorporates flexible premiums and an adjustable death benefit? - ANSWER-Universal Life
What type of life policy covers 2 lives and pays the face amount after the first one dies? - ANSWER-Joint Life Policy
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called - ANSWER-Limited-Pay Life
What kind of life insurance product covers children under their parent's policy? - ANSWER-Term rider
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? - ANSWER-Family Maintenance policy
Which of the following statements about a Variable Whole Life policy is CORRECT?
-It provides a minimum guaranteed Death benefit
- It is a combination of a Limited Period Endowment and a Decreasing Term policy
- Its premiums and benefits are variable
- It has a guaranteed rate of return - ANSWER-It provides a minimum guaranteed Death benefit
Credit Life insurance is - ANSWER-issued in an amount not to exceed the amount of the loan
When does Term Life expire? - ANSWER-At the end of the policy period
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? - ANSWER-Face amount plus the policy's cash value
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as - ANSWER-Variable Life
What type of life policy covers two people and pays upon the death of the last insured? - ANSWER-Survivorship
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? - ANSWER-Renewable
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? - ANSWER-Decreasing term policy
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? - ANSWER-10 years
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is - ANSWER-the cost
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n) - ANSWER-exclusions
Which statement regarding the Misstatement of Age provision is considered to be true?
-Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
-Requires that a new policy must be applied for if a misstatement of age is found on the current policy
-Misstatement of Age provision is valid only during the contestable period
-Insurer may void the policy if a misstatement of age is discovered - ANSWER-Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions? - ANSWER-Reinstatement provision
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? - ANSWER-50,000
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - ANSWER-$100,000
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
-Coverage can be added at specific events such as marriage or having a child
-Evidence of insurability is not required when the option is exercised
-Evidence of insurability is required when the option is exercised
-Coverage can be added at specific ages - ANSWER-Evidence of insurability is required when the option is exercised
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - ANSWER-Full face amount minus any past due premiums
Which of these are NOT an example of a Nonforfeiture option?
-Extended Term
-Reduced Paid-up
-Cash Surrender
-Life Income - ANSWER-life income
When can a policyowner change a revocable beneficiary? - ANSWER-anytime
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed? - ANSWER-daughter
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? - ANSWER-revocable [Show Less]