CH#2: Life Insurance Basics Question And Correct Answers
It is intended to provide coverage on a date earlier than the date of the issuance of the
policy - ✔✔What is the purpose of a conditional receipt
A) It is intended to provide coverage on a date earlier than the date of the issuance of the
policy
B) It guarantees the applicant that a policy will be issued in the amount applied for in the
application
C) It serves as proof that the agent has determined the applicant to be fully insurable for
coverage by the insurance company
D) It is given by the agent only to applicants who fully prepay all scheduled premiums in
advance of policy issue
Cash values can be borrowed at any time - ✔✔What does "liquidity" refer to in a life
insurance policy
A) The policyowner receives dividend checks each year
B) The insured is receiving payments each month is retirement
C) Cash values can be borrowed at any time
D) The death benefit replaces the assets that would have accumulated if the insured not
died
Insurers are barred from requesting HIV testing - ✔✔Which of the following statements
regarding HIV testing for life insurance purposes is NOT true
A) The testing practices must meet the criteria of the U.S. Department of Health and Human
Services
B) HIV testing is regulated at the state level
C) Insurers are barred from requesting HIV testing
D) Positive test results will be forwarded to the state's Department of Health if a physician is
not selected by the applicant
,An applicant who is a smoker - ✔✔Which of the following applicants could the insurer
charge a higher rate of premium and not violate regulations regarding unfair discrimination
A) An applicant who is a smoker
B) An applicant who was born in another country
C) An applicant who is legally blind
D) An applicant who has been a victim of domestic abuse
Whole life - ✔✔Which of the following types of insurance policies would perform the
function of cash accumulation
A) Credit life
B) Increasing term
C) Whole life
D) Term life
Buy-sell agreements are normally funded with a life insurance policy - ✔✔Which of the
following statements concerning buy-sell agreements is true
A) Benefits received are considered income taxable
B) Buy-sell agreements pay in the event of a medical emergency
C) Buy-sell agreements are normally funded with a life insurance policy
D) Premiums paid are deductible as a business expense
With the policy - ✔✔If a policy includes a free-look period of at least 10 days, the Buyer's
Guide must be delivered to the applicant
A) With the policy
B) Upon issuance of the policy
C) Prior to accepting an initial premium
, D) Prior to filling out an application for insurance
Buyer's Guide - ✔✔Which of the following is a generic consumer publication that explains
life insurance in general terms in order to assist the applicant in the decision-making process
A) Policy Summary
B) Illustrations
C) Buyer's Guide
D) Insurance Index
Pays dividends to policyowners - ✔✔Which of the following is usually true of a participating
life insurance policy
A) Pays dividends to policyowners
B) May be converted to a term life policy
C) Pays dividends to stockholders
D) Assesses premiums against stockholders
To help the insured understand all aspects of the contract - ✔✔Why should the producer
personally deliver the policy when the first premium has already been paid
A) To find out how the family has been doing since the initial presentation
B) To make sure the policy is not stolen or lost
C) To help the insured understand all aspects of the contract
D) To enure the producer gets paid commission
Once every 3 months - ✔✔How often may a life settlement provider contract an insured
regarding the insured's health status if the insured's life expectancy is more than one year
A) Once every 3 months
It is intended to provide coverage on a date earlier than the date of the issuance of the
policy - ✔✔What is the purpose of a conditional receipt
A) It is intended to provide coverage on a date earlier than the date of the issuance of the
policy
B) It guarantees the applicant that a policy will be issued in the amount applied for in the
application
C) It serves as proof that the agent has determined the applicant to be fully insurable for
coverage by the insurance company
D) It is given by the agent only to applicants who fully prepay all scheduled premiums in
advance of policy issue
Cash values can be borrowed at any time - ✔✔What does "liquidity" refer to in a life
insurance policy
A) The policyowner receives dividend checks each year
B) The insured is receiving payments each month is retirement
C) Cash values can be borrowed at any time
D) The death benefit replaces the assets that would have accumulated if the insured not
died
Insurers are barred from requesting HIV testing - ✔✔Which of the following statements
regarding HIV testing for life insurance purposes is NOT true
A) The testing practices must meet the criteria of the U.S. Department of Health and Human
Services
B) HIV testing is regulated at the state level
C) Insurers are barred from requesting HIV testing
D) Positive test results will be forwarded to the state's Department of Health if a physician is
not selected by the applicant
,An applicant who is a smoker - ✔✔Which of the following applicants could the insurer
charge a higher rate of premium and not violate regulations regarding unfair discrimination
A) An applicant who is a smoker
B) An applicant who was born in another country
C) An applicant who is legally blind
D) An applicant who has been a victim of domestic abuse
Whole life - ✔✔Which of the following types of insurance policies would perform the
function of cash accumulation
A) Credit life
B) Increasing term
C) Whole life
D) Term life
Buy-sell agreements are normally funded with a life insurance policy - ✔✔Which of the
following statements concerning buy-sell agreements is true
A) Benefits received are considered income taxable
B) Buy-sell agreements pay in the event of a medical emergency
C) Buy-sell agreements are normally funded with a life insurance policy
D) Premiums paid are deductible as a business expense
With the policy - ✔✔If a policy includes a free-look period of at least 10 days, the Buyer's
Guide must be delivered to the applicant
A) With the policy
B) Upon issuance of the policy
C) Prior to accepting an initial premium
, D) Prior to filling out an application for insurance
Buyer's Guide - ✔✔Which of the following is a generic consumer publication that explains
life insurance in general terms in order to assist the applicant in the decision-making process
A) Policy Summary
B) Illustrations
C) Buyer's Guide
D) Insurance Index
Pays dividends to policyowners - ✔✔Which of the following is usually true of a participating
life insurance policy
A) Pays dividends to policyowners
B) May be converted to a term life policy
C) Pays dividends to stockholders
D) Assesses premiums against stockholders
To help the insured understand all aspects of the contract - ✔✔Why should the producer
personally deliver the policy when the first premium has already been paid
A) To find out how the family has been doing since the initial presentation
B) To make sure the policy is not stolen or lost
C) To help the insured understand all aspects of the contract
D) To enure the producer gets paid commission
Once every 3 months - ✔✔How often may a life settlement provider contract an insured
regarding the insured's health status if the insured's life expectancy is more than one year
A) Once every 3 months
