Exam Missed Questions Readiness Exam
What is the late fee for a producer license renewal?
$100
What is the tax penalty for withdrawing money from an annuity prior to age 59.5?
10%
Most domestic insurers must be examined at least once every
5 years
Policy loan requests, except for loan requests for payments of due premiums, may be deferred for a period of up to
6 months
A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?
A percentage of the face amount of the policy
If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will
Adjust the death benefit to what the premium would have purchased at the actual age or gender.
Which of the following documents used in the underwriting process contains specific medical details about an applicant?
Attending Physician's Statement (APS)
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Being permanently disabled
Which distribution(s) from a Modified Endowment Contract would be taxable as income at the time received to the extent that the cash value of the contract immediately before the payment exceeds investment in the contract?
Both partial cash surrender and policy loan
An insured and his spouse had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount
Children's term rider
Which of the following is the distinguishing characteristic of the interest-adjusted net cost method?
Considering the time value of money in comparing life insurance costs
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will
Continue to increase
What type of an interest rate is guaranteed in universal life policies?
Contract interest rate
Decreasing Term insurance is often used to
Cover a mortgage.
An adjustable life policy can assume the form of
Either term insurance or permanent insurance
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as
Estate conservation.
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
What is the difference between a straight life policy and a 20-pay whole life policy?
Premium payment period
How often do premiums in variable universal life policies vary from those in variable whole life policies?
Premiums are flexible.
A whole life policy that will generate immediate cash value is a
Single premium policy
All of the following are true of credit life EXCEPT
The insured names the beneficiary.
How are policy loans calculated?
The policy's cash value minus unpaid loans and accrued interest
Which of the following is NOT a personal use of life insurance?
An individual buys insurance to fund a buy-sell agreement
The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?
Loss of the breadwinner's income
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?
Paid-up addions
Which dividend option will increase the death benefit?
Paid-up additions
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
Pay the death benefit to the estate of the insured
A married couple purchases a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to contribute making the premium payments due to death or disability. Which policy rider should their agent recommend?
Payor benefit
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
Purchase of a new home
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses
Among the applicants in the same class and life expectancy, which of the following factors can be used to determine premium rates?
Occupation
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer.
What does the application of contract of adhesion mean?
Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
The reduction of premium option uses the dividend to reduce
Next year's premium
Cash Value guarantees in a whole life policy are called
Nonforfeiture values
The family term rider incorporates
Spouse term and children's term.
What is the exclusion ratio used to determine?
The annuity benefit to be excluded from taxes
What is the exclusion ratio used to determine
The annuity benefit to be excluded from taxes
Which provision may be added to a permanent life policy, at not cost, that insures that the policy will not lapse so long as there is cash value?
Automatic Premium Loan option
An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action?
False financial statement
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family term
Which of the following is correct statement about annuities?
Fixed annuities do not provide protection against inflation.
How will life insurance proceeds that are paid as a sump sum received by the beneficiary?
Free of federal income taxation
Under which of the following conditions would life insurance proceeds be taxable by the federal government?
If there is a transfer for value
Which of the following statements describes one of the reasons individuals purchase life insurance?
It creates an immediate estate.
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT?
It does not have a guaranteed death benefit
If a retirement plan or annuity is qualified, this means
It satisfies IRS requirements for favorable tax treatment
When comparing a Joint Life Policy to two individual policies of the same amount on the same insureds, which condition is true?
Joint Life has a lower premium than the total of the two individual policies.
Which of the following is guaranteed under a variable whole life insurance policy?
Minimum death benefit
In the event an annuitant dies during the accumulation period, and there is a beneficiary named in the annuity, annuity benefits would be paid to the
Named beneficiary
Before an insurer may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet
Solvency requirements
In a deferred annuity, the difference between the accumulation value and the surrender value is the
Surrender value
Life insurance creates an immediate estate. Which of the following best explains this statement?
The face value of the policy is payable to the beneficiary upon the death of the insured.
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
If an annuity has a guaranteed minimum interest rate, this means
The interest rate will never drop below the guaranteed minimum.
All of the following are true of the Survivorship Life policy EXCEPT
The premium is based on the age of each insured.
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
The primary beneficiary died before the insured.
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability
All of the following are true of group life insurance EXCEPT
The insureds each own their own contract
