PA Life Insurance State Exam Prep Questions and Correct Answers

life insurance policyowners are free to assign or sell their policy to anyone or anything regardless of the relationship between the new owner (the assignee) and the insured *the continuing need for insurable interest between owner and insured disappears after a life insurance policy is issued* Insurable Interest -the financial interest a person has in another person or property -all insurance applicants must have an insurable interest in the person or property that is to be insured Review -with life insurance, insurable interest is not required after the policy is issued -It is never necessary for the policy beneficiary to have an insurable interest in the insured or the policyowner -Immediate family relationships automatically represent an insurable interest; beyond that, burden of proof is on the applicant to show that one exists. Categories of Life Insurance -a basic requirement to qualify for group insurance is that the group must be a "natural group", one not formed for the express purpose of purchasing group insurance. -i.e. employers, labor unions, trade and professional association groups Permanent Life Insurance -designed to provide life insurance protection for the insured's entire life. There is no policy termination date. If premiums are paid, the insurance stays in force. -common examples include whole life insurance, universal life insurance, and variable life insurance Important features of permanent life insurance -it has level premiums, once the policy is issued premiums remain level for the duration of policy coverage -the accumulation of a cash value, eventually equaling the face amount at age 120 (95 in universal life)