Life & Health Insurance

103 important questions on Life & Health Insurance

adverse selection

never insurable because it offers the possibility of a profit

aleatory contract

a consideration

utmost good faith

misrepresentation

The California Insurance Code

an insurable interest

rescind the coverage

Life insurance

the beneficiary may chose

Mortality table

tax deductible

a short rate cancellation

a loading charge

Monthly
Quarterly
Annual

The underwriting department

standard, substandard, and preferred

a binding receipt

a conditional receipt

The 10-day free-look period

personal information about the applicant

under no circumstances

may never be considered

constructive delivery

inspection reports
Medical Information Bureau
the application

less medical underwriting than individual policies

Decreasing term

the entire contract provision

ownership provision

the grace period

The client should borrow from the cash value and continue paying premiums.

Reduced paid-up

Extended term

Paid-up additions

Waiver of payor's premium

Waiver of premium

there is no standard life policy

automatic loan provision

absolute assignment

nonpar policies

The amount paid to the beneficiary is the death proceeds was reduced by the amount of the loan.

Revocable and irrevocable

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Life & Health Insurance

103 important questions on Life & Health Insurance

Insurers protect themselves against large losses by underwriting applications. This prevents

A speculative risk is

When there is an unequal exchange of monies between the parties of a contract, this is a(n)

Statements made in an application that are guaranteed to be true are

Knowingly lying on an application to obtain coverage would be an example of

Attaching a premium check to an application and forwarding it to an insurer and, in exchange, receiving from the insurer a promise to indemnify would be

When both parties are relying on a statement made to each other in the formation of a contract, it is known as

Failure to communicate information would be an example of

A false statement in the application could void the policy if its material is

A body of laws that deals with wrongs done to others is

Voluntary abandonment of a right is known as

When an insurer voids a contract for material misrepresentation, it is an example of

The parties to the contract, risk insured against, and time and duration of premium are found on the first page of the policy. This is required by

Someone who would suffer a financial loss upon the death of the insured would be said to have

If a judge ruled in favor of an insured because of an ambiguity in a contract, this would be

The unequal exchange of values (small premium for large liability exposure) represents what feature of an insurance contract?

The period in which an insurer has the right to exercise rescission from the policy effective date is

Concealment would be grounds for an insurer to

Which of these contracts would not be considered a personal contract?

In an insurance contract, if an insured suffers a loss as a result of a covered peril and the insurer is obligated to pay, the contract is said to be

Which department of an insurer is responsible for analyzing data to develop rates?

What does an insured par the insurer per unit of coverage?

If a client was paying a semiannual premium and wanted to discount his premium, he would have to pay premiums on what basis?

True or False - Individual life insurance premiums are tax deductible.

An employer would be able to deduct its share of group premiums paid as a business expense. T/F

Life insurance lump-sum distributions are taxable. T/F

Life insurance dividends are guaranteed returns of excess premiums and are taxable. T/F

If the policyowner at the time of her death has not chosen a settlement option:

The interest that life insurance dividends earn is

The life income period certain settlement option guarantees payments for a specified number of years or the lifetime of the recipient. T/F

What assists actuaries in determining future claims due to deaths of insureds?

If an employer paid in full or in part for group life insurance for its employees, the premiums paid would be

An insured cancels a policy, and the insurer returns the unearned premiums less a 15% penalty. This is called:

An insurer covers its expenses by charging

Which of the following would be a premium payment mode?

The department of an insurer that is involved in the selection rating and classification of risk is

The three main classifications of risk are

Up to three different persons could be part of an insurance contract

The underwriter will automatically decline applicants who are classified as substandard. True or False

One of the underwriter's main responsibilities is to protect the insurer from adverse selection. True or False

Life agents are known as field underwriters and they represent

The application more fully identifies the applicant/insured. True or False

The Medical Information Bureau (MIB) may deny applicants access to their records. True or False

The Fair Credit Reporting Act was passed to protect a consumer's right to privacy, and it also allows a consumer to challenge and correct any inaccurate information about himself. True or False

When a change is made on an application, it must be made with the applicant's consent and the change must be initialed by the insurer. True or False

An insurer cannot ask questions in the application when the responses will be used only for marketing purposes. True or False

Questions asked in the application are used to gather only underwriting information. True or False

A receipt that provides immediate coverage is

A receipt that provides coverage from the date of application or medical exam is

The period in which an insured has the right to examine a policy and, if dissatisfied, return it for a full refund of premium is

Part 1 of an insurance application gives the insurer

An insurer may make changes to an application

Regarding HIV/AIDS testing, an applicant's address or marital status

When an insurance company relinquishes control of (delivers) a policy, this is known as

All of the following are the sources of insurability information about life insurance applicants:

A senior purchases a senior health insurance policy. What is the free look period?

Credit life insurance protects

Industrial policies are typically issued in small face amounts of $1000 or less. T/F

Group policies require

In a life insurance policy, the death benefits is also known as the face amount, or the limit of liability. True or False

Cash value is a feature of term insurance. True or False

Term insurance offers pure protection and an individual could purchase more coverage with a lesser outlay in premiums, at least in the early years. T/F

What a type of term policy would pay off a mortgage in the event of the death of an insured?

A client purchased a whole life policy 30 years ago, and she is now 70 years old. The policy has a face amount of $200,000. When will it endow?

A limited pay whole life policy paid up at age 65 will endow at age 65. T/F

An insured purchased a 20-year limited pay policy 10 years ago with a face amount of $50,000. If he dies next month, the beneficiary will receive

Joint and survivorship (last to die) policies are written on two lives, usually sold for the purpose of paying estate taxes, and sold for the purpose of paying estate taxes, and sold in large face amounts of $1 million or more. T/F

Under a family policy (family plan), children born after the policy is issued are added automatically at no additional premiums. T/F

On a universal life policy, the insurer deducts mortality and expenses and then credits the interest. T/F

Variable life policies require dual licensing because all investments in the separate accounts are regulated by the

The policy, application, and riders constitute

The provision that states that the policyowner has a right to assign the policy, change beneficiaries, settlement options, and so forth is known as

The period after a premium is due and before the policy lapses is

War is common exclusion found in a policy. T/F

A client has a permanent policy and wishes to borrow one-fourth of the cash value. The policy is in force and has no other outstanding loans against the cash value. What would an agent tell this client?

A misstatement of age or gender will cause the insurer to void the policy, refunding only premiums paid to the beneficiary. T/F

The free-look period begins at the time of policy delivery. T/F

Nonforfeiture options protect the policyowner. T/F