Insurance Exam Flashcards

Which type of life insurance policy builds cash value and provides permanent coverage?

Answer: Whole life

Whole life insurance provides lifelong coverage and accumulates cash value over time, unlike term which expires.

An insured's home is destroyed by fire. The insurer pays the cost to rebuild it with new materials of like kind and quality. This is called:

Answer: Replacement cost

Replacement cost coverage pays to repair or replace damaged property without deducting for depreciation.

Under the coordination of benefits provision, when a child is covered by both parents' health plans, which plan pays first?

Answer: The plan of the parent whose birthday falls first in the year

The birthday rule states the plan of the parent whose birthday (month and day) comes first in the calendar year is primary.

A surety bond in which a business owner is bonded against dishonest acts of employees is called a:

Answer: Fidelity bond

A fidelity bond protects employers from losses caused by dishonest or fraudulent acts of their employees.

Which provision in a disability income policy requires the insured to be under a physician's care to receive benefits?

Answer: Physician care clause

The physician care clause stipulates that the insured must be under regular care of a licensed physician to qualify for disability benefits.

An annuity that begins making payments immediately after a lump-sum premium is paid is called a(n):

Answer: Immediate annuity

An immediate annuity starts income payments within one payment period (usually one month) after the single premium is paid.

Under the Fair Credit Reporting Act, an applicant who is denied insurance based on a consumer report must be:

Answer: Notified and given the reporting agency's contact information

When adverse action is taken based on a consumer report, the insurer must notify the applicant and identify the credit reporting agency used.