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Life Insurance Underwriting and Policy Issue
Terms in this set (15)
A Medical Information Report (MIB) report may disclose which of the following
Prior use of marjuana
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
Fair Credit Reporting Act
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
The underwriting process involves all of these EXCEPT for?
An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors?
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
probability of making timely premium payments
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
Signed HIPPA disclosure
What is the purpose of the U.S.A. Patriot Act?
detect and deter terrorism
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
The USA Patriot Act was enacted in
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
Exclusion for the medical condition
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
at the time of application
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
waived one of its legal rights
Tom, a carpenter, applies for an individual disability income insurance policy. Which definition of total disability will the insurer probably use when issuing the policy?
When the insurer stipulates the time period for payment of claims, how soon must the insurer pay a death benefits claim after receiving the proof of death?
Installing a sprinkler system or burglar alarms are both examples of which risk management technique?
An insurance producer license may be renewed if the producer has paid the applicable fees, submitted the renewal form to the Commissioner, and
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Suppose interest rates on Treasury bonds rose from 5% to 9% as a result of higher interest rates in Europe. What effect would this have on the price of an average company’s common stock?
Find the interest rates earned on each of the following: a. You borrow $720 and promise to pay back$792 at the end of 1 year. b. You lend $720 and the borrower promises to pay you$792 at the end of 1 year. b. You lend $720 and the borrower promises to pay you$792 at the end of 1 year. d. You borrow $15,000 and promise to make payments of$4,058.60 at the end of each year for 5 years.
Stock X has a 10% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock’s coefficient of variation. b. Which stock is riskier for a diversified investor? c. Calculate each stock’s required rate of return. d. On the basis of the two stocks’ expected and required returns, which stock would be more attractive to a diversified investor? e. Calculate the required return of a portfolio that has $7,500 invested in Stock X and$2,500 invested in Stock Y. f. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?
Sandrine Machinery is a Swiss multinational manufacturing company. Currently, Sandrine’s financial planners are considering undertaking a 1-year project in the United States. The project’s expected dollar-denominated cash flows consist of an initial investment of $2,000 and a cash inflow the following year of$2,400. Sandrine estimates that its risk-adjusted cost of capital is 10%. Currently, 1 U.S. dollar will buy 0.94 Swiss franc. In addition, 1-year risk-free securities in the United States are yielding 3%, while similar securities in Switzerland are yielding 1.50%. a. If this project was instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project? b. What is the expected forward exchange rate 1 year from now? c. If Sandrine undertakes the project, what is the net present value and rate of return of the project for Sandrine?