Question 1 Which of the following items should not be taken into account when pe

Question

Question 1

Which of the following items should not be taken into account when performing a "due care" analysis?

assessing the general characteristics and financial information of the company

reviewing profitability, leverage, and liquidity tests

looking at the company's ratings by the major rating services

inspecting the company's marketing materials

2 points

Question 2

Life insurance companies with better mortality experience than other companies tend to have

higher underwriting standards

nonqualified deferred compensation plans for general agents

a mutual holding company structure

a 401(k) matching program for employees

2 points

Question 3

In choosing life insurance policies, match the problem to the product.

True

False

2 points

Question 4

One of the critical questions in examining a policy illustration should be how much of the value is guaranteed and how much is projected.

True

False

2 points

Question 5

It is important in reviewing a policy illustration to remember that dividends are not guaranteed.

True

False

2 points

Question 6

The longer the period into the future that policy values are projected, the more likely they are to be accurate.

True

False

2 points

Question 7

The easiest policy comparison method to understand and use is the

interest-adjusted net payment cost index

traditional net cost method

equal outlay method

Baldwin method

2 points

Question 8

A typical "incontestable clause" will prevent an insurer from challenging an insurance contract because of

non-payment of premiums

fraudulent misrepresentations in the application

lack of insurable interest in the applicant at the inception of the contract

procurement of the policy with intent to murder.

2 points

Question 9

If an insured individual dies under circumstances that suggest suicide, the presumption is that he did not, and the burden of proof is on the insurer to prove that suicide, in fact, occurred.

True

False

2 points

Question 10

Most states require that life insurance contracts contain a grace period of 30 days, during which the policy remains in force even if the insured dies without having made the premium payment.

True

False

assessing the general characteristics and financial information of the company

reviewing profitability, leverage, and liquidity tests

looking at the company's ratings by the major rating services

inspecting the company's marketing materials

Explanation / Answer

1)reviewing profitability, leverage, and liquidity tests

2)a mutual holding company structure

3)true

4)true

5)false

6)true

7)equal outlay method

8)fraudulent misrepresentations in the application

9)true

10)true

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