Exam Life

Which of the following is TRUE of the limited pay whole life policy?

) Coverage continues after the policy is paid-up.

Which of the following is TRUE of an equity-indexed annuity? A) It is a variable annuity. B) It may decrease in value. C) it requires a securities license to sell. D) It has a guaranteed minimum interest rate.

) It has a guaranteed minimum interest rate.

Which of the following lists the three common types of permanent individual life insurance?

) Variable Life, Whole Life, Universal Life

What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one?

) insured original issue age is used

why is relying solely on employer group life insurance generally considered inadequate for most individual's needs?

A) It is financially insufficient to cover end of life expenses.

Which whole life policy premium type is the most common?

A) continuous premium

Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms?

A) insuring clause

Which of the following is characteristic of a nonqualified plan?

A) plan does not meet federal guidelines for tax benefits

In which of the following must a beneficiary change request be filed in writing to the insurer and is made effective by the insurance company recording the change in its records?

A) recording method

hen the courts look at a contract to determine the intent of the parties which of the following is considered?

A) the entire contract

Which of the following occurs immediately after the application is submitted and the initial premium paid?

A) the underwriting process begins

Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account?

A) variable

Which of the following is the time limit on certain defenses after which the policy becomes incontestable?

B) 2 years

Which policy provision permits the policyowner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policyowner rejects the terms or costs?

B) Free look

Why is the accidental death benefit referred to as double indemnity?

B) It provides twice the face value in the policy for death due to accident.

Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries? A) They are LESS likely to receive a loan based on the expectations of the proceeds. B) They are MORE likely to receive a loan based on the expectations of the proceeds. C) They can be changed without the beneficiary's consent after a life changing event. D) They are responsible for premium payment when policyholder fails to pay.

B) They are MORE likely to receive a loan based on the expectations of the proceeds

All of the following are classifications of risk EXCEPT A) preferred B) non-nicotine. C) substandard D) declined

B) non-nicotine.

How might someone cover the extra expenses of child care and home-related costs?

B) purchasing family term insurance

All of the following are features of the spendthrift clause EXCEPT A) transfer of proceeds to creditors is prohibited. B) the beneficiary may encumber the proceeds. C) proceeds are protected by the insurer from the beneficiary's creditors. D) the proceeds are paid in some other way than a single lump sum.

B) the beneficiary may encumber the proceeds.

Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit?

B) variable universal life

Which annuity settlement option provides a stated monthly amount to the annuitant and upon the annuitant's death the same or a lesser amount paid for the lifetime of the survivor?

C) Joint and survivorship option

All of the following are tax qualified retirement plans EXCEPT A) 401(K) B) 403(B) C) Section 529 plan D) SIPMPLE IRA

C) Section 529 plan

What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application?

C) The applicant and possibly the agent initial any changes made.

How do warranties differ from representations?

C) a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge.

All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while A) serving in the military B) living overseas C) committing a misdemeanor D) piloting a personal aircraft C) committing a misdemeanor

C) committing a misdemeanor

Which of the following is exempted from the incontestability provision in insurance policies? A) change in health

C) convertible

What type of insurance should a company purchase if it wants to insure the life of its CEO?

C) key person insurance

Group AD&D policies may be deducted by whom and under which deduction category?

C) the employer under business expenses

What is the purpose of Stranger-originated life insurance (STOLI)?

C) the policy is originated primarily or solely for the purpose of resale

If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of the following EXCEPT A) insurer's practices with respect to the treatment of this information B) an opportunity to refuse the dissemination of the information C) the treatment procedures that are covered by the policy. D) the applicant's rights to maintain privacy C) the treatment procedures that are covered by the policy.

C) the treatment procedures that are covered by the policy.

Which of the following is common in an increasing term life policy?

D) It begins with little or no insurance protection.

Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy?

D) any exclusions

In a level term life policy, which ALWAYS remains constant? D) death benefit

D) death benefit

Obtaining consumer information reports under false pretenses is prosecutable by which of the following?

Fair Credit Reporting Act

How does the per capita rule apply to proceeds from a life insurance policy?

The proceeds are divided equally among living primary beneficiaries.

Which of the following refers to how often a premium is paid?

mode

All life insurance and health insurance contracts contain all of the following EXCEPT A) conditions B) Insuring clause C) Policy face D) representation

representation

n order to AVOID being classified as an MEC, a policy must pass which of the following?

) seven-pay test

All of the following are TRUE regarding incomplete applications EXCEPT A) the underwriting department will return the application to the agent. B) there will be a delay in the underwriting process. C) the applicant will have to wait additional time before coverage begins.

D) the incomplete application can be accepted with the missing information added later.

All of the following are required signatures on a life insurance application EXCEPT A) the proposed insured B) the applicant C) the agent D) the minor in a juvenile policy

D) the minor in a juvenile policy.

The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policyowner UNLESS which of the following is true? A) The policyowner has named a revocable beneficiary. B) The policyowner deems the beneficiary unfit. C) The insurer prohibits changes to beneficiaries.

A) The policyowner has named a revocable beneficiary. B) The policyowner

For an individual long-term care policy there is an annual dollar limit for tax-deductions that is base on which of the following?

A) age

Which of the following is an example of a premium payment mode?

A) annual premium payment

Under the misstatement of age or gender provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application?

A) benefits are adjusted to an amount that the premium would have purchased at the correct age or gender

An insured and the beneficiary are both killed in a fatal accident. Which provision presumes the insured survived the beneficiary? A) common disaster clause B) endorsement method C) contingent beneficiary D) irrevocable beneficiary

A) common disaster clause

The group conversion option is allowed for all of the following EXCEPT

A) during the annual benefits enrollment period.

Current assumption whole life policies are sensitive to which of the following?

C) interest rates

Which of the following is TRUE for a flexible premium annuity? A) The company promises to pay the annuitant an amount each period beginning after a single lump sum payment. B) The actual amount of the annuity benefit is determined in advanced. C) A single set amount premium is paid by the annuitant on an annual basis. D) The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.

D) The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.

All of the following are ownership rights EXCEPT A) borrowing funds against cash value B) changing the beneficiary of the policy C) assigning all of the rights of the policy to another person D) switching the policy from one insured to anther D) switching the policy from one insured to another

D) switching the policy from one insured to another