GA Life Quiz
Which of the following individuals must have insurable interest in the insured? a) Producer b) Policyowner c) Beneficiary d) Underwriter
b) Policyowner
Which statement about reinstatement is FALSE regarding a policy reinstatement provision?
A reinstated policy is incontestable
Which of the following is NOT a feature of a whole life policy?
Increasing premium
Which of the following distributions from a qualified retirement plan will incur a 10% tax penalty? a) Made to the beneficiary b) Before the participant's age 59 1/2 c) As part of a qualified rollover d) After the participant's age 70 1/2
b) Before the participant's age 59 1/2
All of the following are dividend options in life insurance policies EXCEPT? a) Interest only b) Accumulation at interest c) Reduction of premium d) One-year term
a) Interest only
An employee wants to join a group insurance plan. In order to avoid proving insurability, what must the applicant do? a) Join during the enrollment period b) Provide a medical history to the insurer c) Nothing, proof of insurability is never required in a group plan d) Sign a statement of continued good health
a) Join during the enrollment period/If a person applies for group coverage after the open enrollment period, proof of insurability may be required in order to avoid adverse selection.
Which of the following is the default settlement option for life insurance policy proceeds? a) Lump sum b) Fixed amount c) Interest only d) Life income
a) Lump sum
Under the cost of living adjustment rifer, what will happen to the face amount in the policy? a) A decrease each year, based on the insured's age b) An increase with the inflation rate c) An increase each year, by a set percentage d) An increase or decrease, along with CPI
b) An increase with the inflation rate
Why should the producer personally deliver the policy when the first premium has already been paid? a) To ensure the producer gets paid commission b) To find out how the family has been doing since the initial presentation. c) To make sure the policy is not stolen or lost. d) To help the insured understand all aspects of the contract.
d) To help the insured understand all aspects of the contract.
If $100,000 of life insurance proceeds were used in a settlement option that paid $13,000 per year for ten years, which of the following would be taxable annually?
$3,000 ($10,000 per year would be income tax free as principal, and $3,000 per year would be income taxable as interest.
All of the following information needs to be included on an application for life insurance EXCEPT? a) Health insurance policies in force b) Medical information about the applicant c) The agent's statement, if applicable d) Life insurance with other insurers
a) Health insurance policies in force
An insured missed her premium payment on her cash value policy, and the grace period has lapsed. The policy is still in force because the insurer has deducted the cost of the premium from the policy's cash value. What provision allows this? a) Reinstatement b) Automatic premium loan c) Incontestability d) Waiver of cost of insurance
b) Automatic premium loan
An insured, age 45, has a paid-up at age 65 whole life insurance policy with a death benefit of $150,000. The policy's cash value will be $150,000 at the insured's age a) 45 b) 65 c) 100 d) 90
c) 100
If a change needs too be made to the application for insurance, the agent may do all of the following EXCEPT a) Draw a line through the first answer, record the correct answer, and have the applicant initial the change. b) Note on the application the reason for change. c) Destroy the application and conoletia new one. d) Erase the incorrect answer and record the correct answer.
d) Erase the incorrect answer and record the correct answer.
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following EXCEPT a) Conditions b) Consideration c) Legal Purpose d) Offer and acceptance
a) Conditions
Which of the following would be considered a peril? a) Playing golf in a thunderstorm b) Fire c) Smoking d) Driving too fast for conditions
b) Fire(a cause of loss is a peril)
An individual has a $50,000 convertible term life insurance policy. If he chooses, he can a) Convert to another term policy with a lower face amount without proof of insurability b) Convert to whole life policy for the same face amount without proof of insurability c) Purchase another term policy and increase his death benefit without proof of insurability d) Purchase an annuity for any face amount using th e 1035 exchange privege
b) Convert to whole life policy for the same face amount without proof of insurability
What is the usual federal income tax treatment of individual life insurance? a) Deductible premiums, taxable death benefits b) Nondeductible premiums, nontaxable death benefits c) Deductible premiums, nontaxable death benefits d) Nondeductible premiums, taxable death benefits
b) Nondeductible premiums, nontaxable death benefits
Which of the following would be the most likely to start a tax-sheltered annuity? a) A self-employed business owner b) Public school teachers c) Low-income individuals d) Military personnel
b) Public school teachers
If a policy includes a free-look of at least 10 days, the Buyer's Guide may be delivered to the applicant a) Prior to filling out an application for insurance. b) With the policy. c) Upon issuance of the policy. d) Within 30 days after the first premium payment was collected.
b) With the policy
Which division of an insurance company is responsible for the selection, evaluation, and distribution of risks? a) Marketing and sales b) Claims c) Underwriting d) Actuarial
c) Underwriting
If a beneficiary is NOT named for annuity benefits, to which of the following will the benefit be paid? a) The insurance company b) The next of kin c) The benefit will be forfeited d) The annuitant's estate
d) The annuitant's estate
When the insured becomes disable under the requirements of a life insurance policy, which of the following provisions keeps the policy in force even though the owner stops making the premium payments? a) The spendthrift clause b) The accelerated living benefit c) The guaranteed insurability d) The waiver of premium
d) The waiver of premium/ This is a type of insurance protection on an insurance policy. Waiver of premium results in insurance company giving up their right to premium payments during the period of disability. The policy remains in force, in all respects, until the insured is no longer disable or they die.
Under the terms of the 10-day free-look period, a claim will be paid a) If the policy has not been returned whether or not a premium was paid. b) Only if the policy is returned c) Under no circumstance; there is no coverage during the free-look period d) If the premium has been paid and the policy has not been returned.
d) If the premium has been paid and the policy has not been returned.
Which statement best describes "agreement" as it relates to insurance contracts? a) One party accepts the exact terms of the other party's offer b) All parties must be capable of entering into a contract c) The intent of the contract must be legally acceptable to both parties d) Each party must offer something of value
a) One party accepts the exact terms of the other party's offer
If a life agent wants to sell variable life policies, what license must the agent obtain? a) Securities b) Surplus lines c) Personal lines d) Life insurance only
a) Securities
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a) A corporations can be an annuitant as long as the beneficiary is a natural person. b) The annuitant must be a natural person c) The contract can be issued without an annuitant d) A corporation can be an annuitant as long s it is also the owner
b) The annuitant must be a natural person
What is the purpose of the agent's report in the application process? a) To explain policy features and benefits to the applicant b) To request medical information about the applicant from the attending physician c) To provide additional information about the applicant to the underwriters d) To give disclosures to the applicant
c) To provide additional information about the applicant to the underwriters
Which of the following risk classifications would pay the lowest premium? a) Superb b) Substandard c) Standard d) Preferred
d) Preferred
To which of the following must insurance producers report changes of business or residence address? a) The policyholders b) The insurer c) The Department of Insurance d) The NAIC
c) The Department of Insurance
An insured's flexible premium is invested into a separate account. What type of insurance product does the insured have? a) An annuity b) Variable Life c) Variable universal life d) Universal life
c) Variable universal life
Which of the following are members of the Medical Information Bureau? a) Hospitals b) Consumers c) Doctors d) Insurers
d) Insurers
Which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs? a) Endowment b) Term insurance c) Paid-up at 65 insurance d) Straight whole life
b) Term insurance
An individual owns a participating whole life policy and uses her policy dividends to buy more of the same type of coverage for herself. She has chosen the a) One-year term option b) Accumulation at interest option c) Paid-up additions option d) Reduced paid-up option
c) Paid-up additions option
When a life insurance policy continues because of a payor benefit clause, it means a) The insured is only covered to age 18, and then the policy expires b) The insurer pays monthly disability income to the premium payor c) The owner of the policy is disabled or has died d) At the insured's age 21, the death benefit is reduced by 50%
c) The owner of the policy is disabled or has died
An agent and an applicant for a life insurance policy fill out & sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issue. When will coverage begin? a) When the agent delivers the policy, collects the initial premium, an the applicant completes an acceptable Statement of Good Health. b) On the designated effective date. c) On the application date. d) When the agent submits the application to the company and the company issues a conditional receipt.
a) When the agent delivers a policy, collects the initial premium, an the applicant completes an acceptable Statement of Good Health.
An insured invests the cash value of a fixed annuity in which of the following? a) Separate account b) Index account c) Blended account d) General account
d) General account
An out of state producer wants to start selling insurance in this state. What type of license should the producer obtain? a) Temporary b) Nonresident c) Limited lines d) Surplus
b) Nonresident
An insurer is issued a cease and desist order for misrepresentation. What is the insurer required to do to comply with the order? a) Pay a $1,000 fine b) Discontinue all insurance transactions c) Surrender its Certificate of Authority d) Stop the action in violation
d) Stop the action in violation
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a) Unfair trade practices law b) The Guaranty Association c) Consumer Privacy Act d) The Fair Credit Reporting Act
d) The Fair Credit Reporting Act
If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? a) Unilateral b) Adhesion c) Conditional d) A legal (but unethical) contract
a) Unilateral
What is the purpose of settlement options in life insurance? a) They provide the beneficiary with the income he/she cannot outlive b) They determine how death proceeds will be paid c) They are non forfeiture guarantees built into the policy d) They guarantee a return of excess premiums
b) They determine how death proceeds will be paid
For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin is known as the a) Annuitization period b) Activity period c) Accumulation period d) Annuity period
c) Accumulation period
All of the following statements describe unfair trade practices EXCEPT? a) Offering special favors not specified in the policy b) Making maliciously critical statements about the financial condition of another insurer. c) Discriminating against a group of individuals because of poor risk d) Misrepresenting pertinent facts about coverage
c) Discriminating against a group of individuals because of poor risk.
A person is required to be licensed to do which of the following? a) Perform executive duties for the insurer b) Perform any duties for an insurer c) Create insurance advertisements d) Receive commissions
d) Receive commissions /Producers must be licensed in the appropriate line of authority in order to receive commissions for insurance transactions.
Which of the following statements is correct about a standard risk classification in the same group and with similar lifestyles? a) Standard risk pays a higher premium than a substandard risk. b) Standard risk requires extra rating. c) Standard risk is also known as high exposure risk. d) Standard risk is representative of the majority of people.
d) Standard risk is representative of the majority of people.
If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must the agent do? a) Change the applicant's answer to what the agent feels is correct b) Erase the answer once the applicant submits the application c) Inform the insurance company d) Refuse the applicant
c) Inform the insurance company
Which non-forfeiture option allows a policy owner to use the existing cash value to purchase a policy of the same face amount as the original policy for as long as the policy will buy? a) Extended paid-up insurance b) Cash surrender value c) Extended term insurance d) Reduced paid-up insurance
c) Extended term insurance
When an applicant makes a material statement on the insurance application, the statement is considered to be a/an a) Indemnity b) Representation c) Fact d) Warranty
b) Representation
For an insurance contract, the principle of utmost good faith means a) The policy owner will be indemnified in case of loss b) Each party relies upon the truthfulness of the other c) The contract involves only the policy owner and the insured d) Each party is equally responsible for the value of the policy
b) Each party relies upon the truthfulness of the other
What is the default non forfeiture option when the policy owner neglects to select an option? a) Extended term b) Reduced paid-up c) Cash surrender d) Purchased paid-up additions
a) Extended term/maintains the same death benefit for the beneficiary, but the coverage is for fewer years.
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a) Automatically pay the policy proceeds. b) Pay the policy proceeds only if it would have assured the policy. c) Pay the policy proceeds up to an established limit. d) Not pay the policy proceeds under any circumstances.
b) Pay the policy proceeds only if it would have issued a policy.
A life insurance policy has a legal purpose of both of which of the following elements exist? a) Underwriting and reciprocity b) Offer and counteroffer c) Policyowners and named beneficiaries d) Insurable interest and consent
d) Insurable interest and consent
When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?
As a fiduciary
A beneficiary decides to take a settlement option that will pay the largest amount per payment, knowing that after the beneficiary's death no monies will be paid out to any descendants. The settlement option is a) Life Refund Income b) Life with Fixed Period (Period Certain) c) Life Income (Straight Life) d) Life Guaranteed
c) Life Income (Straight Life)
Decreasing term insurance is often used to a) Pay estate taxes b) Build up cash value for retirement c) Liquidate an estate d) Cover a mortgage
d) Cover a mortgage
After 12 years, a policy owner decides she no longer needs the large death benefit on her whole life policy. She calls her agent, who informs her that she can use the reduced paid-up non-forfeiture option. Which of the following is NOT true about the new policy? a) The new policy will require no future premium payments b) The new policy will be in effect until the insured's age 100 or death c) The new death benefit is lower than the original policy d) The new policy will expire in 10 years
d) The new policy will expire in 10 years
What is the purpose of the buyers guide? a) To list all policy riders. b) To provide information about the issued policy. c) To allow the consumer too compare the cost of different policies d) To provide the name and address of the agent/producer issuing the policy
c) To allow the consumer too compare the cost of different policies
All of the following are general requirements of a qualified plan EXCEPT a) The plan's benefit cannot discriminate in favor of the top employees b) The plan must be approved by the IRS c) The plan must have a vesting requirement d) The plan must be temporary
d) The plan must be temporary
When is the earliest a life policy may go into affect? a) After the underwriter reviews the policy b) When the first premium is paid and the policy has been delivered c) When the insurer approves the application d) When the application is signed and a check is given to the agent
d) When the application is signed and a check is given to the agent
An insured has terminal illness and needs access to half of his death benefit to pay for medical expenses. Which rider would meet the insured's current needs?
Accelerated (Living) Benefit
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive a) The amount paid into the annuity b) Guaranteed minimum benefit c) The remainder of the principal d) Nothing; the payments will cease
d) Nothing; the payments will cease. /Straight life pure annuity will pay a specific amount of income for the remainder of the annuitant's life. This payment will cease at death, regardless of the amount of principal that hasn't been paid out.
Representations are written or oral statements made by the applicant that are
Considered to be true to the best of the applicants be knowledge.
Which of the following would qualify as a competent party in an insurance contract? a) The applicant is intoxicated at the time of application. b) The applicant is a 12 year old student c) The applicant is under the influence of mind-impairing medication at the time of application. d) The applicant has a prior felony
The applicant has a prior felony conviction.
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a) The policy will be interpreted as if the insured did not have an answer to the question. b) The policy will be void. c) The insurer may deny coverage later, because of the information missing on the application. d) The policy will be interpreted as if the insurer waived it's rights too have an answer on the application.
d) The policy will be interpreted as if the insurer waived it's rights too have an answer on the application.
