Life & Health Insurance
Terms in this set (126)
describe the individual who is covered by the insurance
an individual may need medical attention after slipping on the ice and falling
application of the law of large numbers enables insurers to
estimate the future losses of a class or group of people
estimation of future losses is more accurate when information is from
a large group
policy designed to protect against the risk of living too long
type of insurance company owned by its shareholders
ZYX Company is incorporated in Alabama
ZYX Company is incorporated in Mexico
self-insurance is an example of which method of handling risk
term used to denote insurance companies
social device for spreading the chance of financial loss among large number of people is
following risk is most likely insurable
george is concerned about the financial impact his premature death would have on his family
roger refuses to travel by airplane. roger is managing the risk of being in a plane crash by
chianna becomes injured in a car accident caused when she took her eyes off the road to answer her cell phone. this is an example of
mathematicians who study and compile statistical data regarding exposure and risks for insurance companies are called
which of following is NOT an example of insurable interest?
juan wishes to take out a life insurance policy on his neighbor because his neighbor is a careless driver and juan thinks his neighbor is likely to die in a car accident
kim is injured in a house fire. when the bills come, insurance company pays 80% of the cost, kim pays the rest. this is an example of
Hoosier Insurance Company is owned by the policyholders. Hoosier Insurance is
which of following people represents several insurance companies but owns the policy expirations
which of following can bind an insurance company by oral and or written agreement
property and casualty producer
Duties of the Commissioner, Superintendent, or Director of Insurance
issue a certificate of authority
examine books, records, and documents of an insurer, agent, or broker
approve insurance policy forms sold within a state
Making a false or misleading statement regarding the benefits, advantages, or terms of a policy
Making an oral or written statement that is false, malicious, or derogatory to the financial condition of any insurer and is done with the intent to harm
Using threat or force to create a monopoly or restrict fair trade in the transaction of insurance
Boycott, coercion, and intimidation
Inducing an insured to lapse, forfeit, or surrender a policy based on misrepresentations or making an incomplete comparison of another policy from a different company
Making false statements regarding the solvency of an insurer with the intent to deceive
False Financial Statement
Offering any inducement in the sale of insurance that is not specified in the contract such as commission splitting
Formulating an advertisement that is untrue, deceptive, or misleading
charging a different rate for individuals of the same class and life expectancy
Replacing a policy repeatedly with the same company allowing the producer to collect continuous first year commissions
Collecting additional charges from the insured that are NOT specified in the contract
illegal premiums and charges
Pretext interviews are
NOT permitted unless some evidence of criminal activity exists
A customer is anyone
with whom a company has an ongoing relationship
The federal government
has the right to regulate the business of insurance to the extent that such business is NOT regulated by state law
Insurance laws generally are written by
Head of the State Department of Insurance (usually called the Commssioner) is responsible for all of the following except
examining individual insurance policies before issuance
The nonfinancial regulatory activities of an insurance department fall under the broad heading of
which of the following individuals would NOT be exempt from a producer licensing requirement?
Alicia works in an insurance office conferring directly with or offering advice to prospective purchasers about the benefits, terms, and conditions of insurance policies Alicia thinks would be a good match
Producers may act as
either agents representing the insurance company or brokers representing the individual seeking insurance
Most insurance regulation takes place at
Applicants for insurance must be given advance notice including all of the following types of information except
the persons who are collecting information
Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual about whom a financial institution collects information is
under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual with whom a financial institution has an ongoing relationship is
Nonfinancial regulatory activities of an insurance department fall under the broad heading of
The Commissioner of Insurance has all of the following powers except
promulgating insurance laws
associations organized to protect claimants, policyholders, annuitants, and creditors of financially impaired insurers are known as
which of the following people would be required in most states to obtain an insurance license?
Sarah, who sells insurance to businesses only
a person licensed as an insurance producer in another state who moves to this state has how many days after establishing legal residence to become a resident licensee without taking prelicensing education or an examination?
which of the followning individuals is least likely to be granted a temporary license?
Kim, who wants to try selling insurance on a temporary basis before investing the time and money into being licensed
Business written on the producer's own life or interests is known as
which of the followning is considered an unfair claims practice?
failing to affirm or deny coverage within a reasonable time after proof of loss
an organization that establishes model laws that are often adopted by states with only slight differences is
the National Association of Insurance Commissioners
insurance agents are appointed by
life and health producers DO NOT have the authority to bind an insurance company to a contract agreement - T or F
Ralph is a producer for Hooiser Insurance Company. His contract states that he is allowed to put the company's logo on his business cards and the door to his office. This is an example of
Tom has always made a practice to having his policyholders mail ther premium checks directly to his home address and forwarding them on to the insurer so that he is aware of anyone missing payment and can contact policyowners directly if that should happen. His contract does NOT allow this practice, but the insurer is aware of the actions and has NOT asked him to stop. This practice is an example of
Gina accepts the initial premium when she sells an insurance policy and sends it to the company with the application. Nothing in her contract mentions handling of initial premiums. This is an example of
Albert's life insurance premium is due on the 10th of the month. Because he gets paid at the end of the month, he has always sent the premium in late. The insurer has been accepting his premium this way for 3 yrs. when a new CEO comes in and decides to crack down on late premiums, cancelling Albert's policy for nonpayment of premium. Albert contests this decision legally and gets the policy reinstated. The decision to reinstate the policy is an example of
Which element is NOT necessary for the formation of a valid contract?
The initial premium payment sent with an application constitutes which part of the insurance contract?
Life Insurance contracts contain ALL of the following except
a policy folder
Ken has paid only 4 premiums on his health insurance policy when he is hit by a car. The insurance company pays out nearly half a million dollars to cover his treatment and a lengthy stay in intensive care. This an example of
Carol applies for a life insurance policy and pays the initial premium. Carol has
made an offer to the insurer
The insurer looks at Carol's application and decides to offer Carol a modified policy, including an exclusion Carol did NOT request. The insurer has
made a counteroffer to Carol
The failure to disclose known facts is
when one party may receive much more from the contract than she gives in exchange, this is known as
Both parties to the contract have an affirmative duty to disclose all information relevant to the contract, whether or not it is requested. This is known as
Utmost Good Faith
The tendency for poor risks to seek and be covered by insurance more often than average risks is
John fills out an application for a life insurance policy to insure his own life, for which he plans to pay the premiums. John is playing all of the following roles except
life insurance that requires no medical exams and asks only basic medical questions is known as
if an applicant is rated or declined an insurance policy, the reasons for this decision will be explained to the applicant by
Robin is a 25 y.o man who drinks occasionally, does not smoke, and has no known health problems. he probably would be classified by an insurer as
which of the following factors does NOT have an effect on insurance premium rates?
To be certain that insurers have the money available to pay claims as they rise, they are required to maintain
To be eligible to purchase insurance, an association group must
have a constitution and bylaws
For group insurance policies, the covered individual receives proof of coverage in the form of
certificate of insurance
If a group insurance policy is contributory, what % of employees must participate?
Albert works as a window washer at the top of skyscrapers. Bernie works as a window washer on the ground floor. The fact that Albert is more likely to seek insurance coverage than Bernie is an example of
Gianna starts work at a new job on March 1. She is not eligible for insurance coverage until July 1. The period between start date and her eligibility date is
Gianna is eligible for coverage on July 1. She enrolls on July 15. She does NOT need to take a medical exam because she enrolled within
Tom started work the same day Gianna did, at the same company. Tom does not try to enroll in the company insurance plan until Aug 15. What will Tom probably need to do?
Submit to a medical exam and full individual underwriting
The baker's union and the butcher's union worked together to form a trust to provide insurance to their employees. This type of group is called
A candlestick maker offers insurance to its employees. This type of group is called
Jimmy's Print Shop and Bryan's Botique join together to form a trust to provide insurance to their employees. This type of group is called
a multiple employer trust
The United Auto Workers Union provides insurance to its employees. This type of group is called
General Electricians offers insurance to its employees. About 80% of its eligible employees are currently covered under the plan. This plan is
Group insurance generally does NOT require
stringent medical underwriting
Sara is hired to work at a restaurant. She is NOT eligible to join the group insurance plan for 30 days. This is an example of
which of the following group underwriting characteristics generally is required by law?
Kelsey's Printing funds all the claims in a year, regardless of the amount of the claim. Kelsey's insurer just manages the paperwork for the claims. Which of the following option's is Kelsey's Printing using?
Administrative services only
Al's Print Shop pays a provisional premium at the beginning of the year. At the end of the year, Al's insurer has the right to change that premium by charging more or issuing a refund. Al's policy is funded using which premium option?
PDQ Printing pays for all routine claims. PDQ insurer pays for excess or unexpected claims beyond a specified trigger point. PDQ's policy is funded using which premium option?
Which of the following costs are associated with death?
Doctors or hospital bills from a final illness or accident
Paying off debts such as credit cards and other loans
An insurance producer analyzed Bonita's life insurance needs, taking into account Bonita's net annual salary, her expenses, her current age, and depreciation of the dollar over time. This producer was using
human life value approach to needs analysis
An insurance producer analyzed Dwight's life insurance needs, taking into account the amount of money Dwight anticipated needing for his funeral and the amount of income that would be required to maintain his family's standard of living n the event of his death, including projected college costs and the costs of supporting his spouse. This producer was using
the needs approach to needs analysis
Wilma's husband died 3 yrs ago, leaving her with 2 grade school-aged children. Which income period is Wilma in?
Family dependency period
Which of the following is an advantage of life insurance as property?
life insurance required no physical upkeep
Life insurance proceeds are generally the only source of income for surviving dependents of a breadwinner. - True or False
Which of the following factors should NOT be taken into account when a producer makes recommendations as to the amount and type of insurance needed by an individual?
How much commission does the product offer
Ana wishes to purchase enough insurance to support her husband for the rest of his life if she should die prematurely and then leave a sizeable inheritance for her children upon his death. Which method should be used to calculate the amount of insurance necessary?
Ken has terminal cancer and wants to access the death benefit of his life insurance policy to pay medical expenses. How might he be able to do this?
He may access the funds either through a viatical settlement or by use of the accelerated provision
Shane is a master carpenter in business for himself. His business is probably operated as
Which of the following is NOT financed using life insurance?
An application is completed and submitted without an initial premium on July 1. A medical exam is required and completed on July 12. The company issues the policy as a standard issue on August 1 and the producer hand delivers the policy on August 4. When is coverage effective?
August 4, after the premium is paid and the statement of good health is signed
Alice decides to buy a policy. She pays the first premium; the producer issues a receipt and tells her that she is covered immediately, until she is notified that the policy is either issues or declined. What kind of receipt has Alice received?
Brenda decides that she wants to buy a policy. She fills out the application but does NOT pay the initial premium. What kind of receipt will Brenda receive?
Camille decides to buy a policy. She pays the first premium, and the producer issues a receipt and tells her that she is covered immediately, unless the company decides she would have been a substandard risk. What kind of receipt did Camille receive?
What kind of receipt is most commonly used in life insurance?
Insurers sometimes require personal delivery so that
the producer can verify the insured's good health at the time of delivery
If payment of a valid death claim is delayed, what is the usual reason?
The insurer has NOT received proper notification of the death
Lee applies for a policy, pays the initial premium, and receives a conditional receipt on March 14. On March 15, he passes the medical exam with flying colors. On March 16, an undiagnosed brain aneurysm bursts, killing Lee instantly. On March 17, the insurer receives the results of the medical exam, which includes no information about the aneurysm. On March 19, the insurer receives the notice of claims. The insurer will
pay the claim
Rich applies for a policy, pays the initial premium, and receives a binding receipt on Friday, Sept 1. On Monday, Sept 4, the underwriting dept decides not to issue the policy and places the file in a pile for notification letters to be sent out at the end of the week. On Wed, Sept 6, Rich is killed in an auto accident. On Thurs., Sept 7, the insurer receives the notice of claim. The insurer will
pay the claim because a binding receipt ensures coverage until the potential insured is notified of a rejection.
Brit purchases a policy and tells the producer he wants immediate coverage, regardless of what the underwriting outcome is. To meet Brit's demand, the producer most likely will accept the premium and
set up a temporary insurance agreement
A policy may be issued in all of the following ways except
as an exchange policy, covering someone other than the original applicant
Which of the following statements describes the best use of a producer's time when personally delivering the policy?
Mrs. Ritley delivers a policy and restates the advantages of the policy and how it can be amended to meet future insurance needs
Which of the following statements is NOT true?
Replacement is illegal
Term insurance provides
pure insurance protection
Carl's insurance policy is designed to cover the mortgage on his house if he should die before paying it off. The policy is
The least common of the following types of insurance is
Pam owns a 1-yr term policy. At the end of the year, she may purchase another identical policy without showing proof of insurability. Pam's policy is
whole life insurance policies provide all of the following except
an opportunity for significant investment gains
Zelda agrees to pay premiums on her policy every year for 20 yrs. After that, she will no longer have to pay premiums, but her insurance protection will cont. until she dies. Zelda has
Jerry has a policy that pays dividends, which are used to purchase additional paid-up insurance to increase the face value of the policy. Jerry has
Ashely has a policy that she must pay premiums on until she is 100 yrs old or until she dies. Ashley has
Continuous premium whole life policy
Which of the following is NOT flexible in a universal life policy?
guaranteed interest rate
Adam purchased a universal life policy. In his 2nd year, he decides to pay a $1,000 premium. What happens to the cash value of his policy at this point?
The front-end load is deducted from the premium, the premium is added to the cash value, the cost of insurance is deducted from the cash value, and the current interst rate is credited to the cash value.
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