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Life License-Test#1

Part 1

QuestionAnswer
1. The purchase of an insurance policy by a consumer is the process of risk: Transfer- getting someone else to handle the risk (an insurance company) b/c the risk is too large for the consumer to handle on their own
2. the concept of "adhesion" refers to: a court making a decision in favor of an insured b/c there was unclear wording in the policy document
3. They type of life insurance policy which will pay the face amt to a beneficiary if the insured dies during the policy's term, or will pay the face amt to the insured who is living at the end of this period of time is a/an: Endowment policy (definition)
4. What does the "grace period" in a life insurance policy permit the insured to do after the premium due date? pay the premium without losing coverage; purpose of grace period is to keep policy on the books without a lapse in coverages
5. a policy names an irrevocable beneficiary. This beneficiary type: Has a "vested" interest in the life contract; "vested" means that they have a valuable interest in the contract, and must approve everything that is done to the contract, but they do not have the same role as a policy co-owner
6. of the following, which best describes an annunity? the insurance company has an obligation that is different for both the accumulation period and the liquidation period; the insurer's obligation in accumulation period -invest the money entrusted to it, liquidation period is pay out money accumulated
7. the life analyst is allowed to charge a fee for services provided, as long as it is stated in writing, in advance of performing the service. All following must be included in this written agreement, except: the services which will be performed and provided,but for which no fee will be charged; (included: exact fee to be charged, commission received for sale of products if applicable, and info being analyzed can be obtained directly from insurer at no charge
8. policy issued to 32 yr old w/ face amt of $100,000, when reaches 55, policy has built up $100,000 cash value- what type of policy is this? an endowment at age 55 policy
9. person is 65 yrs of age; who has the greatest need for comprehensive long term care insurance? a person with $50,000 in yearly income and $130,000 in assets; this person has something to lose (income and assets) but is not wealthy enough that they would not have to worry about paying future expenses
10. client has Medicare Pt A; client spends a wk in hospital for a small operation. this is 1st time in hospital for 3 yrs, which is true? after paying deductible, client will have 100% coverage paid by Medicare
11. in regards to representations, which is correct? representations are statements made to the best of one's knowledge (definition of representation)
12. premiums for a Variable Universal Life insurance contract: can vary in payment schedule and amt;
13. which of the following comprise a Family Income insurance policy? permanent combined with decreasing term insurance
14. what form of insurance usually found in Group Life Insurance? 1 year term-used to keep the premiums low
15. after receiving your insurance life agent license, if you change your address, you are to notify the Insurance Commissioner, in writing: immediately; IC wants ability to find agent in case of possible violations
16. "consideration", as it applies to a life insurance contract, is defined as: the premium payment; "considerations" includes premium, info, and the promises made by the insurer
17. in determining the rates to charge payers for life insurance premiums, a company will use: mortality, interest, expenses (three components of premiums)
18. scenario describes how dividends can work if a company overestimates what is needed to issue policies a dividend can result
19. what occurs during the accumulation period of an annuity? allows the annuity to build on a tax deferred basis
20. the usual elimination (waiting) period for a Disability Income rider is 3 to 6 months; the long period of time is imposed to allow the insured to get back to work or prove they really are disabled. A longer period is also chosen so that the premium is more affordable
21. which is true regarding an irrevocable beneficiary? if the irrevocable beneficiary permits, the policy owner may borrow from the cash values; owner and the irrevocable beneficiary must both agree when a change is made to the policy
22. which of the listed premium payment schedules would reflect the lowest overall premium? annual; no interest is being charged
23. a non-medical application: may require an applicant to submit to a physical; even when application is taken non-medically the insurance company reserves the right to ask the applicant to take a medical exam
24. if a policy is cancelled and the insurance company legally keeps the earned premium along with a penalty charged the premium payor it is called a short rate cancellation; (def)
25. which of the following would be considered an alien insurer? a company located in England and doing business in California; alien insurers are domiciled outside o the U.S., but are allowed to do business in the state
26. the doctrine of "utmost good faith" applies to the business of transacting insurance. Which of the following is an example of its application? each party is entitled to rely upon the representations of the other party; key phrase is "rely on each other"-part of def
27. all of the following statements are correct regarding a warranty, EXCEPT: (correct) - warranties made at or during execution of policy must be contained in policy, signed by insured and attached to contract; it is a stmt merely made to the best of one's knowledge, and an only be express; (Correct ctd)-should either party violate a warranty it entitles other party to cancel contract, warranties can be made abt events in past, present, or future
28. an agent makes a misleading comparison of a policy he is selling in order to convince a prospect to lapse an old insurance policy. What is this called? twisting-def
29. which of the following is not a legal activity in this state? participating in a plan to offer free insurance if a person buys some form of service; no such thing as free insurance
30. the term "consideration" applies to the issuance of an insurance policy. choose the best description of this term... consideration is the exchange of value btw insured and insurer, specifically the exchange of premium for insurer's promise to pay benefits
Created by: jennyhqs2