b) Human life value approach Adverse selection is well controlled. 1)physical exam 4. D) An agent's report and inspection report provides personal information. 2. the application is used at the primary source of info. (c) face amount of the policy and the legal reserve. All of the following are business uses of life insurance EXCEPT (2), The current market will influence the cash value \end{aligned} Which of the families below is likely to have the least need for a large life insurance policy? The accounting records of DVD Sales, Inc., include the following accounts: CashJul15,500???? After Alex has made 20 premium payments, his life insurance policy is considered \text{Accounts Payable} & 104 & 95 & 95 & 97 \\ 3)MIB=records of all previous insurances they had. c) Conditional To sell variable insurance what must you have? What does "liquidity" refer to in a life insurance policy? ~~~\text{Direct labor cost}&190,000\\ Rating codes are assigned to show financial strength or weakness of each company rated c) Policy loans are taxable distributions. (a) universal life insurance. Accelerated Living Benefit/Accelerated Death Benefit? Therefore, it is responsible for 1/3 of the $24,000 loss, or $8,000. According to the entire contract provision, what document must be made part of the insurance policy? B. Nonadmitted -Follows all conditions of contract & pays premium, -insurer says how policy works -assignor=assignee (a) I only Originating policy b. II. Jul3119,500\begin{aligned} a) Indeterminate Premium 3)defined benefit plans (a) They increase at an increasing rate. The policy is a contract of adhesion The cost of a living rider is calculated by what? A policy summary An insurer that was incorporated in a DIFFERENT STATE that it is doing business in is a _____________??? Which of the following is an example of an unfair claims settlement practice? What is NOT invested in the stock market but pays you interest? 1) insured gets higher amount This form of life insurance has fixed premiums and the cash value is not guaranteed. (c) The number of times the coverage can be renewed is limited. Upon policy delivery, the producer may be required to obtain any of the following EXCEPT -policyowners right provision \hline \text { Jul 31 } & 3,000 Consumer report A surplus lines broker places risk with nonadmitted insurers when coverage cannot be placed with admitted insurer carriers D. Viatical settlement. This method of estimating . If the conversion cost is the same for both types of rooms, would you recommend converting the office to a Type I or a Type II room? I. Total personal income in the United States (in billions of dollars) for selected years from 1960 to 2009 is given in the following table. (Choose from the following options) -has cash value invested in the stock market exclusions: when the accident occurs within an illness,disease, or mental infirmity. A. -The insurer would pay the face amount of the policy minus the past due premium. (d) neither I nor II. (d) free look provision. A monthly deduction is made from a policy's cash value for the cost of insurance protection. All of the following statements are true of liability insurance, EXCEPT: Answer: liability coverage indemnifies the insured. Exclusions always exist, and there is a reason for each one. Why do most states have a waiting period for couples applying for marriage licenses? The 4 characteristics of a universal life policy are? B. IRS has no jurisdiction B. Twisting An Applicant inaccurately representing information on the application is guilty of: A. All of the following are true about health insurance except: Purchasing health care can help save you from medical bankruptcy. Exclusion Categories The agent d) The Medical Information Bureau. b) Promptly forwarding premiums to the insurance company Get more out of your subscription* Access to over 100 million course-specific study resources What are the temporary needs? Which of the following about decreasing term insurance is true? d) Military personnel. The remaining amounts should be charged to selling and administrative activities. 4) 3 components to the premium, The owner and the insured are different people. Accidental Death Benefit A key person insurance policy can pay for which of the following? 4)policy matures at age 100. \end{aligned} A. All of the following are characteristics of group life insurance EXCEPT. Which of the following is NOT an allowable 1035 exchange? Tom and Nancy Boyle provide financial support for their two children. 3) Retaining the risk. Where does group-life insurance come from? (a) limited-payment whole life insurance To ensure suitability of annuity products, producers must obtain relevant information about the consumer's age, income, financial status, tax status, financial experience and objectives. Insurance is an important tool to manage risks, but often unavailable to poorer households. a) Tax-qualified c) Denying coverage after a reasonable investigation has been conducted a) To limit the insurer's liability after the 2 year waiting period In addition, they provide financial support for Tom's aged father and Nancy's aged mother. - Limited Pay Life Which of the following is NOT an example of a business use of Life Insurance? c. continuous premium whole life A. -also the agent may be required to initial the change, statement of health from insureds personal physician, What are 2 federal laws that protect policy holders & forms that must be completed? B) The parent is responsible for the premium. The 3 categories of private insurers site of incorporation? It is used to help adequacy and equity in rates. ~~~\text{Depreciation on sales equipment}&45,000\\ CPI (consumer price index) without evidence. Correct: A. Insurance companies can charge an interest rate based on the policyowner's credit report. B. A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies, which put the burden of condition on either the insurer or the policyowner. Accelerated Living Benefit/Death Benefit is what type of rider? c) Needs approach What is the purpose of a suicide provision within a life insurance policy? Participating policy. Increasing term (receive dividends & the right to vote). D. The benefit is received tax free b) Index used by stock companies (a) capital retention approach baseball, fishing | 2K views, 10 likes, 0 loves, 0 comments, 2 shares, Facebook Watch Videos from 800 Pound Gorilla Media: Robert talks about fishing in NYC, baseball, and growing up with protective. Agent Sam is using the human life value approach to assess Mary's life insurance needs. 2)Variable annuity An agent told Carl about a form of life insurance in which Carl could select where the savings component is invested. (d) The policyowner can add to a policy's cash value at any time subject to policy guidelines. 3)substandard-highest, 6 factors that are complete for policy 2 be paid? d) Tax-deductible. What (5) Factors for GIO & GIB. whose covered? Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, ICEN6003: IC Engines Operation and Constructi. What is the difference between renewable policy holder & Insurer? Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values, and death benefits for specific years? C. Payment of premium 5)an agreement is set, 1)Level term(cheapest insurance) face value stays the same This is true whether a property or liability form; and regardless whether the insured is a commercial or personal lines client. The face amount decreases as the amount owed on the mortgage decreases. ($000)CashAccountsReceivableInventoryAccountsPayable1$1001992011042$1009650595Quarter3$10099905954$1006045297, Describe Cream Silk's promotion within the context of the multi-attribute model: Which attribute(s) were central to the promotion and how does the model explain what the company was trying to accomplish with the "Human Hair Quartet?" &\text { Accounts receivable }\\ The safety margin is narrower, because the cost of the insurance to the policyholder cannot be adjusted at a later time. An annuity whose based on the stock market index? -cash value can lose value. Liquidity in life insurance refers to availability of cash to the insured through cash values. \end{array} If you don't have health insurance, you pay all costs for healthcare and medical emergencies. c) Counselor Suitability Their premiums are lower don't pick binding receipt at all on test. Explain your answer. C. Certain Risk c) Variable Premium DONT PICK IT!!!!!! What is the MIB? Legal Purpose The issuance of a binder is the result of the ___________________ of an offer. 3)they provide insurance to members. \hline && \text { Jul 31 } & 111,000 \end{aligned} A. Conditional Contract She has limited income and significant life insurance needs. The policy's cash value grows as the investments grow. b. 1)premium payment All of the other statements are true. C. A surplus lines broker accepts business only from non- resident agents What is the primary source of info used to determine insurability by the underwriting department? D) Obtaining a bachelor's degree. Policyholders -receiving dividends(when declared) Which of the following is the basic source of information used by the company in the risk selection process? The cash value available to the policyowner Applicant pays premium to make agreement. All of the following statements about term insurance are true EXCEPT. 1)Whole Life 4)underwriting is complete States regulate the procurement of business from nonadmitted carriers by regulating the brokers who place business with these carriers. C. Consideration ? The correct answer is: The premium decreases to zero by the end of the policy period. Who might receive dividends from a mutual insurer? ~~~\text{Advertising expense}&90,000\\ c) Copy of the original application D) the minor in a juvenile policy. . James purchased yearly renewable term insurance. Question: 55. When both parties to a contract must perform certain duties in order to make the contract enforceable, this is known as what? How do premiums for yearly renewable term insurance change as an insured gets older? & &&\textbf{ Quarter } \\ There are many legitimate need-based expenses that can be paid by life insurance proceeds, from groceries to retirement income. d) All of the above. b) 10% for early withdrawal (b) reduced. the underwriting process is approved for: b) Failure to promptly settle a claim when liability has been clearly established C. Medical Background Correct: B. A state administered health insurance for the needy? Claim is still paid with an adjustment to the benefits. In this case, the applicant will most likely need to fill out a Statement of Good Health. AKA-payout phase. B) The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy. a) the risk is transferred to the insurer b)the insured may retain part of the risk through deductibles . C. A surplus lines broker deals with direct writing companies only d) Primary and secondary beneficiary designations. Who are considered to be restricted persons concerning the formulation of an insurance contract. 3 of them? O c. The policyowner has the option of investing the cash value in several investment accounts. Beneficiary's age is not a suitability factor. When must insurable interest exist in a life insurance policy? (c) Interest credited to a policy's cash value is taxable to the policyowner in the year credited. Renew policy holder has an option- THE INSURER DOES NOT. Tax-qualified annuities are subject to IRA maximum contribution limits. Each policy pays a percentage of the loss based on the percentage of coverage that policy provides. b. 1)increase cash value All of the following statements about the settlement of a claim are true EXCEPT. A) the agent. A) Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value. In an insurance contract, the value that each party gives the other is called the: When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following? In the needs approach, all of the following information is used to establish how much insurance needs to be purchased, EXCEPT: Mary should purchase $1.5 million ($75,000 x 20 working years remaining = $1,500,000). Life insurance proceeds All of the following would be considered to be rebating EXCEPT (b) current assumption whole life. 4)Consumer report=credit, -shorter time span for paying premiums If applicant is not the insured- then insureds signature is required -cash value options B. The applicant has been shown to be a poor personal credit risk. B. Insureds current and future income B. 2. d) Blackout approach. A. Insurance is designed to provide protection against which of the following? This type of life insurance is called Which risk management type is shifting the risk of loss to a larger homogeneous group? What is an exchange of a whole entire life policy for another? The terrorism risk insurance program reauthorization act provides for a terrorism insurance program administered by which federal entity? What are two reasons that people deposit money in banks? &\begin{array}{lr|rr} d. falsely believing that a spouse has been (b) tax-free exchange provision 3)Minors. When an agent collects the initial premium from the applicant, the agent should issue the applicant a. Now Tamara can afford whole life insurance. C. Whole life C. Hazards 3)Consideration What are the permanent working capital needs of your company? Involuntary Risk The US is the only developed nation without a system of universal healthcare, with a large proportion of its population not carrying health insurance, a . All of the following are true of insurance except: a) protects against uncertainty b)means sharing of loss c)eliminates risk d)transfers risk Answer: Eliminates risk Question: Which of the following is NOT true about insurance? All of the following characterize term life insurance, EXCEPT: Select one: a. a) Remains level. Correct: C. Concealment, A. Term-Life policy has what 3 characteristics? Only one party is giving a legally enforceable promise- A one-sided contract is what? b) Outline of coverage When the company earns a profit and elects to share there profits, they pay a ____________to the policyholders or shareholders. Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? Correct: A.A peril. 1)temporary A) They must be given to all Life insurance applicants. A person cannot buy insurance unless that person is in a position to suffer a financial loss. a) Lump-sum approach b) Reduced paid-up c) National Association of Insurance Commissioners 2)face amount is set *The insured is diagnosed with terminal & chronicle illness In terms of social security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receving retirement benefits? The premium is guaranteed for an initial period and then the insurer can charge up to a maximum premium charge in what type of policy? (b) Prepare a correct income statement for October 2017. Is claim still paid if there is a misstatement of age or sex? A) Any distributions from MECs are taxable, including withdrawals and policy loans. Life insurance prodceeds What are some of the questions asked on the application to determine the premium and risk classification of the insured? Study with Quizlet and memorize flashcards containing terms like All of the following are personal uses of life insurance EXCEPT A. Most insurance policies contain a specific limit that an insurer will pay for a single claim. 3. A. -receiving dividends(when declared) -its a rider Jul3125,500\begin{aligned} d) Older. Dividends received by policyholders of a mutual insurer are not taxable. The insurer's promise to pay a covered loss and the insured's payment of the first premium, are examples of: A. Chapter 11 - Life Insurance. d. An insured is driving her automobile and strikes a large pothole that . \text{Net loss}&&\underline{\underline{\$(23,000)}}\\ It is used to pay off the balance on the mortgage. . A. signed waiver of premium ~~~\text{Selling and administrative salaries}&75,000\\ b) Fixed income (c) variable life insurance. Nature of risk D) The suicide provision protects the company from those individuals who purchase life insurance with the intention of committing suicide. Or, Bill can invest $9,000 in project B that promises to pay annual end-of-year payments of$1,500, $1,500,$1,500, $3,500, and$4,000 over the next 5 years. C) Completing pre-licensing training. \hline \text { Jul 1 } & 5,500 &&\\ (a) I only (b) II only Which of the following would be the best option that would help the surviving spouse of the insured to put her child through daycare after the insured's death? B. Payor benefit/Clause is always a _________. After examining other manufacturing cost data, you have acquired additional information as follows. d) The Guaranty Corporation. D) adding cost of living coverage. In the pamphlet, he includes the full name of his insurance agency and the type of insurance that he offers. Copyright 2009-2022 Tests.com LLC - All Rights Reserved. -Not a true insurance company Universal Life is also known as two things what are they? b) Coverage ends and the policy cannot be reinstated. Empire Company is a manufacturer of smart phones. B) The plan is funded by permanent insurance only. 2) standard risk Tamara purchased a term insurance policy when she had high life insurance needs and limited income. c) Coverage ends but the policy can be reinstated at any time. a) Aleatory Cause of potential loss to property such as fire, windstorm, hail, flood, etc. ? D. Claim History Correct: A. Yes, all T-mobile insurance plans cover cracked screens.You will have to pay a deductible fee which will depend on your device model. An agent has authority to do all of the following, except: A. Countersign insurance contracts b. A color-coded map illustrating the current legal status of elective-specific abortion procedures in each of the individual 50 states of the United States of America; plus U.S. territories and federal district [a] As of January 31, 2023 Illegal Legally unclear or legal but no providers Legal before cardiac-cell activity [b] Legal through 15th week LMP (1st trimester) Legal through 18th week LMP . Represent the insured's interest 3)2 Death benefits-(level/increasing) All The statements made on the application are called ______? The employer is the owner . Which term describes the probability of a loss? d) Producer. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. Buy-sell agreements are normally funded with a life insurance policy. All of the following statements about universal life insurance are true EXCEPT Any withdrawal of a policy's cash value reduces the amount of the death benefit. These individuals qualify for lower premiums than those in the other categories. A persons assets & liabilities at their time of death. 3)riders & exclusions c) Disclosure rule B. A mutual insurance company is owned by who? An aleatory contract is a contract where the monetary values of the parties performances are________________. An Insurance broker is responsible for what? C) common stock 4. A SEC registration. Warranty There is no limitation on the number of key employee plans in force at any one time. B. B. (b) level-premium method c) Term life C. Solicit applications on the insurer's behalf 4. Insurance is not designed to cover _____________ losses. O b. Forms of interest and are Sensitive Whole Life, 1) Transfers risk to another insurer Executive office ADD( Accidental death and dismemberment??? It does not include breach of contract. (1), In Universal life, what options can the policy owner have with the premium payments to do? The insurer that is transferring the risk to another company is called the ____________ __________. Company A carries 1/3 of the total coverage ($20,000 + $40,000 = $60,000). The gross premium charged must reflect, at least for competitive reasons, the actual cost of providing the insurance. The demand forecast for a particular night is 130 rentals in the Super Saver class, 60 rentals in the Deluxe class, and 50 rentals in the Business class. Cash value is invested in the stock market. Insurance is considered a transfer of risk. 2)interest sensitive D. Department of Treasury 4)Offer and Acceptance, -direct and identifiable interest in that persons life/as well as financial interest. 1)absolute assignment-all rights are assigned 3)Family Policy(Limited but all fam members paid) 21,000 \\ 1)policy owner can increase/decrease/ or skip premium payments 1) cash value earns interest 2)the face amount Jul313,000\begin{aligned} 1. B) bonds 3. If someone dies within the Grace period, what happens? 2)Procures insurance 4 itself from another insurer, The tax benefit of annuities is tax deferred growth. (a) I only (b) II only II. D. Unilateral Contract The policy is a contract of adhesion. Which of the following is true regarding the beneficiary designation of the former spouse. Correct: A. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. What is the primary source of info for the underwriting department to determine insurability? C. The death benefit paid to the beneficiary \end{array} d) Decreases annually. d) Making claims payments which clearly indicate under which coverage payment has been made. -guaranteed/fixed/level payment, -Immediate "annuitization phase" A debtor has insurable interest in the life of a lender All of the following statements are TRUE concerning Debtor Groups EXCEPT C. Independent rating services evaluate and rate the financial ability of insurance companies B. Aleatory contract What are the two options in death benefit options? How has the Aswan High Dam affected the lives of Egyptians? When Applicant P fails to disclose all of his motor vehicle violations in an application for automobile insurance, he may be guilty of: A. Estopple All of the following are true of negligence, except: a. The concept that the insured should not profit from an insurance transaction is called what?