All of the following statements are true of liability insurance, EXCEPT Which $50,000 life insurance contract if purchased when the insured was 32, would have the highest cash value when the insured is 50? An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. -They provide coverage for risks that other insurers normally would not provide. The safety margin is narrower, because the cost of the insurance to the policyholder cannot be adjusted at a later time. What adds coverage and modifies coverage? One sided contract is a ______________ contract. (1), In Universal life, what options can the policy owner have with the premium payments to do? A. (6). ? B. Insureds current and future income a) Using arbitration when the insured and insurer cannot reach agreement You cannot sell a variable policy without what? B) The plan is funded by permanent insurance only. B) Human life value approach is determined by the loss of income that would result with the death of the insured, after making adjustments for expenses, inflation, etc. (d) neither I nor II. If the initial premium is not paid with the application, the agent will be required to collect the premium at the time of policy delivery. Chapter 11 - Life Insurance. Which type of risk involves the possibility of loss or gain? AccountspayableJul1Jul3114,500??? b) Coverage ends and the policy cannot be reinstated. a) Because the insured is currently not a drug user, his policy will not be affected. RetainedEarningsDividend19,000Jul1NetIncJul3165,00065,000111,000. A peril b. it frequently includes coverage for losses due to casualty and theft. Which nonforfeiture option provides coverage for the longest period of time? Who are considered to be restricted persons concerning the formulation of an insurance contract. 3 of them? This type of life insurance is called For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become c) Accelerated benefit rider. b) Conditional receipt _____________ is an employer paid disability and health insurance coverage that covers job related illnesses or injuries. B. D) Obtaining a bachelor's degree. -then picks a contract. Cash value is invested in the stock market. S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. (c) face amount of the policy and the legal reserve. If company pays dividends, then they are a? Any profit realized in the operation will be used to provide dividends to stockholders as well as surplus funds that may be used as a buffer for future adverse experience. This is called. The NAAR for a life insurance policy is the difference between the 1)absolute assignment-all rights are assigned Solved 55. All of the following statements regarding | Chegg.com Pertaining to insurance, what is the definition of a fiduciary responsibility? -provides income for retirement According to the entire contract provision, what document must be made part of the insurance policy? c) Denying coverage after a reasonable investigation has been conducted 2) premiums do not change The premium is level and guaranteed not to increase. 2)attorneys -has cash value invested in the stock market Why do most states have a waiting period for couples applying for marriage licenses? Pure Risk. An__________ represents the insurer. It is a type of tort. -Not a true insurance company C. Application \end{array} Claim is still paid with an adjustment to the benefits. d) Blackout approach. 1. A monthly deduction is made from a policy's cash value for the cost of insurance protection. Insurance is an important tool to manage risks, but often unavailable to poorer households. What are the two options in death benefit options? \hline \text { Jul 31 } & 25,500 D) adding cost of living coverage. -Follows all conditions of contract & pays premium, -insurer says how policy works -guarantee a stream of income to the person purchasing it known as the annuitant. ~~~\text{Depreciation on sales equipment}&45,000\\ a) Types of mutual companies Misappropriation or illegal withholding of the policyholder's money. An insured becomes disabled at age 22 and can no longer work. Which of the following is TRUE regarding assignment rights for . a. whole life paid at 65 The cash value available to the policyowner When parties to a contract exchange unequal amounts of money, this is said to be what type of contract? Correct: A. a surplus lines broker places risks with nonadmitted insurers when coverage cannot be placed with admitted insurer carriers. b) Unilateral B. Unit 27 Flashcards by Lauren Pulido | Brainscape (a) matured. After insurer makes an offer, what must the applicant do? (a) present value of future benefits and the present value of future premiums. b) Fixed income (d) The policyowner can add to a policy's cash value at any time subject to policy guidelines. 3) Increasing Term. Benefits received are considered income taxable \end{aligned} \end{aligned} \text{Accounts Payable} & 104 & 95 & 95 & 97 \\ The replacing company notifies the replacement company. An insured owns a life insurance policy. Insurance transfers risk but it does not__________ risk. When both parties to a contract must perform certain duties in order to make the contract enforceable, this is known as what? All of the following are true about health insurance except: Purchasing health care can help save you from medical bankruptcy. a) Consumer Privacy Act All of the following are personal uses of life insurance EXCEPT, All of the following are true of key person insurance except, D. The plan is funded by permanent insurance only. B. c) Helping insureds to file claims Study with Quizlet and memorize flashcards containing terms like All of the following are personal uses of life insurance EXCEPT A. c) Counselor 2)Decreasing term(premium is low) declining face value D. Financial Experience. In terms of social security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receving retirement benefits? What is an exchange of a whole entire life policy for another? Our records show that more than one device is associated with this \hline & \text { Jul 31 } & 19,500 C. Unilateral contract All of the following statement regarding credit life insurance are true, except: A. credit life insurance may be written on either and individual or group basis. 1)premium payment 3)Alien Insurer. Who assumes control over an insurance company's funds and management if it becomes insolvent? A. What does it mean when a policy is limited pay life? Involuntary Risk Premiums are not tax deductible as a business expense. 2. Which of the following statements is not correct regarding rates and premiums? If an insurer is incorporated in Rhode Island, but primarily does business in New York, what type of insurer would it be considered in New York? The purpose of an estate clearance fund is to pay all of the following EXCEPT. Long term- the longer the policythe more spread out the policy premiums are. As her friend, you have been asked to review the income statement and make necessary corrections. The 3 categories of private insurers site of incorporation? 3)certified public accountants, Is insurance that is provided by the Federal or State government D. An individual has an insurable interest in her or her own life. a) Indeterminate Premium Accidental Death Benefit Who gets $$money when the policy holder dies? All of the following are true of insurance EXCEPT It transfers risk. Costs of training a replacement 4 All of the following statements about term insurance are true EXCEPT A policy that does not pay dividends to policyowners is a c. Using the payback period, which project should Bill choose? B. -tax free accumulation of borrowing. -its a rider Which method makes the most sense for her to employ? Legal Purpose d) The insurer will sue the insured for committing fraud. -Prepays portion of face amount if diagnosed with terminal illness. A key person insurance policy can pay for which of the following? -But pays you interest, 1)Fixed annuity \hline \text { Jul 31 } & 17,000 They become permanently disabled An annuity whose based on the stock market index? Which of the following types of insurance policies would perform the function of cash accumulation? Taxes, Retirement, and Other Insurance Concep, State Laws, Rules, and Regulations Quizzes, Life Insurance Policy Provisions, Options and, Fundamentals of Financial Management, Concise Edition. Copyright 2009-2022 Tests.com LLC - All Rights Reserved. a) Premium amounts and surrender values Flashcards - D1. Accident and Health Insurance Basics - FreezingBlue (d) indeterminate-premium whole life. She meets the definition of total disability under Social Security. It is used to help adequacy and equity in rates. D) The suicide provision protects the company from those individuals who purchase life insurance with the intention of committing suicide. A. Correct: A. (b) II only 1. A. Whats the cheapest type of permanent insurance? 2)Foreign Insurer Most professional liability insurance policies are written with an occurrence coverage trigger instead of a claims made trigger O c Insureds What happens when a policy is surrendered for its cash value? If the conversion cost is the same for both types of rooms, would you recommend converting the office to a Type I or a Type II room? The remaining amounts should be charged to selling and administrative activities. Can term insurance be both renewable and convertible? All of the following statements about the characteristics of Social Security are true EXCEPT A. Breach of warranty Correct: B. C. Buy-Sell agreements are normally funded with a life insurance policy compulsion? B) Money collected with respect to an insurance transaction must be held in a position of trust by the producer. Empire Company is a manufacturer of smart phones. 1)increase cash value Whole life policy. Where can you find insurance coverage after being rejected by your insurance company for too many claims in the past year? 3)low premiums. A surplus lines broker deals with direct writing companies only 3)they provide insurance to members. 1)Level The insurer's promise to pay a covered loss and the insured's payment of the first premium, are examples of: A. If the corporation collects the policy benefit, then She has limited income and significant life insurance needs. b) Index used by stock companies The interest rate credited to the cash value at the time of issuance remains fixed over the life of the policy. d. 10 payment whole life, Chapter 12 - Life Insurance Contractual Provi, Chapter 15 - Individual Health Insurance Cove, Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese. Only the MIB will provide information about an applicant's medical history. Group life insurance is most often issued as guaranteed annual renewable term. - If the insured suffers a dismemberment the policy pays the CAPITAL SUM which is 50% of the principal sum. A) the agent. 1) Avoiding the risk b) Larger. A contract between insurer and policy holder. -receiving dividends(when declared) Which of the following about yearly renewable term insurance is true? C. Medical Background The death benefit varies according to investment experience. Prepare a pie chart of on-time delivery performance for last month. c) Low-income individuals and families Certificate holders may convert coverage to an individual policy without evidence of insurability. Other factors that are named include "Mortgage underwriters, investment banks, rating agencies, and investors", "low mortgage interest rates, low short-term interest rates . C) Because an insurance company's strength and stability are two very crucial factors in its sustainability, independent rating services have formed to publish regular updates on the financial integrity of different insurance companies. Correct: A Insurance . This is true whether a property or liability form; and regardless whether the insured is a commercial or personal lines client. d) Older. What type of interest does universal life have? A. C) They must contain a warning that actual results may vary. B) They illustrate the nonguaranteed elements of the policy. B) A fiduciary is a producer who handles insurer funds in a trust capacity. All of the following are true of negligence, except: a. insured is always the borrower & the beneficiary=lender SalesrevenueLess:OperatingexpensesRawmaterialspurchasesDirectlaborcostAdvertisingexpenseSellingandadministrativesalariesRentonfactoryfacilitiesDepreciationonsalesequipmentDepreciationonfactoryequipmentIndirectlaborcostUtilitiesexpenseInsuranceexpenseNetloss$264,000190,00090,00075,00060,00045,00031,00028,00012,0008,000$780,000803,000$(23,000). A. Foregin The insured agrees to maintain insurance equal to some specified percentage of the value of the property. $ cant exceed indebtness. -age 100. Costs of training a replacement (Choose from the following options) The insurance contract is a _________ because the court will usually interpret in favor of the insured when an insurance policy is not clear. D) The Life and Health Insurance Guaranty Corporation protects Maryland residents who are policyholders, insureds, beneficiaries, annuitants, and assignees of life and health insurance policies, annuities, and supplemental contracts, if the insurer issuing the policies fails to perform its contractual obligations because it becomes impaired. d) 50% tax on the amount not distributed as required. An insurer or producer may NOT knowingly employ an individual to act in a fiduciary capacity if that individual has been convicted of a felony or crime of moral turpitude within the past 2)can be sold as a rider to a whole-life policy. 2. A FINRA registration. D) Obtaining a bachelor's degree. 3)defined benefit plans still matures at age 100, -premium is paid off at one time &\text { Accounts payable }\\ An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. -kids till 21 B. Total personal income in the United States (in billions of dollars) for selected years from 1960 to 2009 is given in the following table. Forms of interest and are Sensitive Whole Life, 1) Transfers risk to another insurer Chapter 1- General Insurance Flashcards | Quizlet 5)Survivorship Life Policy (policy holder pays themselves). All of the following would be exempt from the producer licensing requirements EXCEPT: A) A customer service representative who discusses policies. Company doing business in the state it was incorporated and owned by the stockholders(people who own stock) who received dividends and the right to vote???? a) Payor rider. -car accident not in conjunction with an illness How does having children affect the decisions that couples must make when considering a divorce? These individuals qualify for lower premiums than those in the other categories. b) Outline of coverage \hline (\$ 000) & 1 & 2 & 3 & 4 \\ B) One step in the investigation of a claim is to determine whether the policy was in force when the loss occurred. If you don't have health insurance, you pay all costs for healthcare and medical emergencies. d) Military personnel. a) Aleatory (c) two-income earner family. C. The death benefit paid to the beneficiary Daycare is considered to be among these expenses. When a replacement is involved, a replacing insurance company is responsible for all of the following EXCEPT: Provide a copy of the Important Notice Regarding Replacement of Life Insurance to the applicant. C. Social Security works exactly same as private insurance. &\begin{array}{r|lr} Be prepared to justify your answer. A contract that allows an insured to be restored to the same financial condition as prior to the loss is considered to be what type of contract? c) National Association of Insurance Commissioners Difference between Universal Life Insurance and Whole Life Insurance? a) Material change Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. Limited-Pay Life & Single-Premium Policies? Which of the following is NOT a fraudulent and intentional deception of the truth? d) The Guaranty Corporation. b) The agent's report b. Which of the following does not constitute the consideration in the insurance transaction? (a) I only D. The face amount remains the same throughout the life of the policy. Premiums are not tax deductible as a business expense Rates Which of the following is an example of an unfair claims settlement practice? The primary purpose of buying an annuity is? What is a statement in the application guaranteed true in all respects? (c) conversion provision I. \end{array} -cash value options Long-term investment decision, payback method Bill Williams has the opportunity to invest in project A that costs $9,000 today and promises to pay annual end-ofyear payments of$2,200, $2,500,$2,500, $2,000, and$1,800 over the next 5 years. ~~~\text{Raw materials purchases}&\$264,000\\ When applicant is not the insured ______________ must exist. Its controller resigned in October 2017. 2)Procures insurance 4 itself from another insurer, The tax benefit of annuities is tax deferred growth. has reached its final destination and can be paid out in full. 3)MIB=records of all previous insurances they had. Beneficiary's age \hline \text { Jul 31 } & 3,000 Instructions AKA-payout phase. What are the temporary needs? D) Insurance covers intentional losses as well as unintentional. The 7 paytest is used to determine if a policy is a _______? *Both not taxable. \hline && \text { Jul 1 } & 65,000 \\ and is NOT a party to the contract. Should a key person die, the benefit is treated as a reimbursement to the business for loss of services from that key person. A policy summary usually includes all the listed information, and must be delivered along with a new policy. D. Concealment B. D. Agents report. The person who receives the benefit when insured dies. 1) Competent Parties Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values, and death benefits for specific years? It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer. Inventory balances at the beginning and end of October were: Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. Estate Creation B. a) To limit the insurer's liability after the 2 year waiting period A. \end{array} a) An agent offers the use of his lake house to person as an inducement to buy. A. B) The parent is responsible for the premium. An insured is driving her automobile and strikes a large pothole that . &\text { Cash }\\ ____________ is a statement that is true to the best of the persons knowledge that is making the statement. 4)Consumer report=credit, -shorter time span for paying premiums 3)Minors. a. The Boyle family can be described as a b. There is a limit for a withdrawal and the insurer charges a fee. &\text { Accumulated depr.-equipment }\\ ~~~\text{Insurance expense}&\underline{8,000}&\underline{803,000}\\ Who might receive dividends from a mutual insurer? C. It's a decreasing term insurance. Conditional contract means the policy holder does what? C) common stock 4. c) Misrepresentation 2)Explain and collect any ratings _____________ is a statement that is true to the best of the persons knowledge that is making the statement. 3. \\ Which of the following about a VUL insurance policy is (are) true? A. Jul3125,500\begin{aligned} 2)Straight Life The 4 characteristics of a universal life policy are? The following are all causes for the Insurance Commissioner to suspend or impose conditions upon the continuance of a producer's license EXCEPT 1. "Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. c) Smaller. An agent that enters into agreements with more than one insurer is called an: A _______ represents the insured in dealing with insurance companies. Yes, all T-mobile insurance plans cover water damage. O b. Flashcards - WA Common Law Practice Exam - FreezingBlue c) Extended term _______ pays dividends to the stock holder. (Choose from the following options) The policy's cash value grows as the investments grow. d) Contingent. b. (a) Interest is credited monthly to a policy's cash value. 2)when benefits begin D) real estate, Under one method of estimating a loss reserve, the reserve is based on life expectancy, duration of disability, and similar factors. B) According to the law of large numbers, the larger a group becomes, the easier it is to predict losses. Address of his principal office B) The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy. d. It does not require a duty to be owed. Which of the following documents must be provided to the policyowner or applicant during policy replacement? Quarter($000)1234Cash$100$100$100$100AccountsReceivable1999699604Inventory20150590552AccountsPayable104959597\begin{array}{lrrrr} Statements in the application that are guaranteed true but later found to be false may result in what? In addition, they provide financial support for Tom's aged father and Nancy's aged mother. A. (d) yearly renewable term, Which statement is true concerning premature death and life expectancy? The policyowner has a variety of options for investment of the cash value. B. Joe, Larry, and Curly own a small business. -Can't lose value Solved All of the following statements about universal life - Chegg Exclusion Categories All of the following are true regarding health insurance policies, EXCEPT: A) An agent or producer may not make changes to the policy B) Once issued, a policy may only be changed with the approval of a company officer C) An agent may change an application with the verbal consent of the applicant b) Copies of illustrations and application Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs. a. mentally counting backward from 1,0001,0001,000 D) They must be signed by both the Producer and the applicant. -low commissions ADD( Accidental death and dismemberment??? C. Payment of premium If the ultimate consumer is a business that collects and pays to the government VAT on . the underwriting process is approved for: 4. In this particular instance the applicant did not commit intentional fraud. 4)underwriting is complete (4), 1)monthly I. There are 2 parties of the contract- what are they? Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, ICEN6003: IC Engines Operation and Constructi.