Primerica-Life Insurance, complete passed exam

Primerica -Life Insurance, complete passed exam Stranger -oriented life insurance policies are in direct opposition to the principle of a. law of large numbers b. good faith c. indemnity d. insurable interest - d. insurable interest -STOLI purchaser doesn't know the insured, or have any interest in the insured's longevity, so it violates the principle of insurable interest Which is generally true regarding insureds who have earned preferre d status? a. they keep a higher percentage of any interest earned on their policies b. their premiums are lower c. they can barrow higher amounts off of their policies d. they can decide when to pay their monthly premiums - b. their premiums are lower - the insured is in excellent physical condition and employs healthy lifestyles and habits All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT: a. the employer pays a bonus to a selected employee to fun d to policy b. it is considered a non qualified employee benefit. c. the policy is owned by the company d. any type of insurance policy may be used. - c. the policy is owned by the company. An insured receives a monthly summary for his life insurance poli cy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? a. variable b. term c. securities d. stock - a. variable - life policies vary in value, as the name suggest s, because the value is based on the stocks that support the policy. If a policyholder wants a more stable, reliable value, he/she should invest in a fixed policy. When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a. aleatory contract b. executive bonus c. key person d. a fraternal association - b. executive bonus In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse may receive retirement benefits? - Blackout period - begins when the youngest child reaches the age of 16 , and ends when the surviving spouse qualifies for retirement benefits, as early as age 60. No benefits are paid during this time. Life insurance may be used to pay state inheritance taxes and federal estate taxes so that it is not necessary to sell off a ssets from the estate to pay these costs. This is called a. estate conservation b. estate creation c. survivor protection d. survivorship insurnce - a. estate conservation - life insurance may be used to pay state inheritance taxes and federal estate taxes so that it is not necessary to sell off assets from the estate to pay these costs. This is called estate conservation. Which of the following applicants could the insurer charge a higher rate and not be charge with unfair discrimination? a. an applicant t hat was born in another country b. an applicant who is legally blind c. an applicant who has been a victim of domestic abuse d. an applicant that smokes cigarettes as opposed to one that does not - d. an applicant that smokes cigarettes as opposed to one that does not Partner A in a business buys a life insurance policy on Partner B to protect herself against a financial loss if he should die. Two years after the partnership is dissolved Partner B dies. Who will receive the death benefit? - Partner A Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach? a. mortgages b. expenses c. estimated longevity d. outstanding debt - c. estimated longevity An emp loyee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds a. $10,000 b. $15,000 c. $25,000 d. $50,000 - d. $50,000 Which of the following would NOT fall into the category of costs associated with death? a. final medical expenses of the insured b. day to day expenses of maintaining the family c. the expense of a vacation for surviving family members d. funeral expenses - c. the expense of a vacation for surviving family members Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a. effect of inflation on income over time b. predicted needs of the family after the insured's death c. insured's current and future income d. insured's annual expenses. - b. predicted needs of the family after the insured's death - are used in the needs approach. The Human Life Value Approach requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time unti l retirement, and the time value of money. Who makes up the Medical Information Bureau? - Insurers Upon policy delivery, the agent may be required to obtain any of the following EXCEPT a. payment of premium b. corrected and resigned application c. signed waiver of premium d. statement of good health - c. signed waiver of premium Amy's insurance premium has decreased slightly, despite the fact that her level of health has remained the same. Which of the following most likely caused the premium decrease? a. she has a Steadily Decreasing Premium policy b. the insurer's customer base is expanding, which allows for lower premiums c. her insurer used interest earned on premiums to lower premium amounts d. her increased age allows for lower premiums - c. her ins urer used interest earned on premiums to lower premium amounts Who is the owner of the policy and who pays the premium in and Executive Bonus plan? a. company is the owner, but the executive pays the premium b. board of directors is the owner, and the board of directors pays the premium c. company is the owner, and the company pays the premium d. executive is the owner, and the executive pays the premium - d. executive is the owner, and the executive pays the premium - the employer reimburses the executive for cost (or pays a bonus in the amount of the premium). Since the executive is receiving compensation, the amount paid by the employer would be considered taxable income. What is the major difference between a Stock Redemption Plan and a Cross Purchase Plan? - In a Stock Redemption Plan, the policies are owned by an entity, and in a Cross Purchase Plan, the policies are owned by individuals - If the business owns the policies, pays the premiums, and is the ben eficiary, the agreement is called Stock Redemption Plan. If the policies are owned by individual business partners who pay the premiums and are the beneficiaries, the plan is called a Cross Purchase Plan What is the purpose of the buyer's guide? - To allo w the consumer to compare the costs of different policies An insured has been diagnosed with a life -threatening disease, and is given approximately six months to live. The insured is in a hard financial situation which will worsen with the upcoming medica l expenses. Which of the following options could he utilize right now? a. liquidity b. surrender c. change of beneficiary d. viatical settlement - d. viatical settlement An applicant is seeking an insurance policy. In the underwriting process, it was determined that the applicant has some dangerous habits, a risky occupation, and poor health. Which of the following is TRUE concerning the policy premium? a. it will likely be higher because the applicant is a substandard risk b. it will likely be the average premium issued to standard risks c. the applicant's habits, occupation and health do not affect the premiums d. it will likely be lower because the applicant is preferred risk - a. it will likely be higher because the applicant is a substandard risk Whic h is the primary source of information used for insurance underwriting? a. applicant interview b. medical records c. private investigations d. application - d. application Two equal partners in a business worth $150,000 are using a Cross Purchase plan to protect against the death of each other. Which of the following statements would be correct? a. partner B buys a policy on partner A in the amount of $75,000 naming Partner A as beneficiary. b. partner A buys a policy on partner B in the amount of $150,000 naming Partner A as beneficiary. c. partner B buys a policy on partner A in the amount of $150,000 naming Partner A as beneficiary. d. partner A buys a policy on partner B in the amount of $ 75,000 naming Partner A as beneficiary. - d. partner A buys a policy on partner B in the amount of $75,000 naming Partner A as beneficiary. What is the name of the insured who enters into a viatical settlement? a. contingent b. viatical broker c. viator d. third party - c. viator - the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract Which government program allows a blackout period? - Social Security