grantee exam

The manner and/or frequency that the policyowner pays the policy premium is called A. Premium mode B. The grace period. C. Premium clause. D. Premium consideration. The premium mode is the manner or frequency that the policyowner pays the policy premium

A. Premium mode

Which of the following statements describes one of the reasons individuals purchase life insurance? A. It helps liquidate an estate through death proceeds. B. It always accumulates cash value. C. It provides income an insured cannot outlive. D. It creates an immediate estate. Life insurance death proceeds can create an estate when the insured dies.

D. It creates an immediate estate.

Agents and brokers must keep records pertaining to insurance transactions for a mandated period of time immediately following which instance? A. The last day of the Free Look Provision B. When the first premium is paid C. The completion of the transaction D. The initiation of a contract Usual and customary records must be kept available and open to inspection by the Commission, at any business time during the 3 years immediately following the completed transaction.

C. The completion of the transaction.

Who is responsible for making sure that all marketing communication is truthful and not misleading in fact or by implications? A. The agent B. The Insurance Commissioner C. Company officers D. The insurer It is the insurer's responsibility that all marketing communications are truthful and not misleading. The content of marketing materials must be accurate complete and clear.

D. The insurer

Which of the following is TRUE regarding premium in a 10-year level premium policy? A. The premium will decrease at the end of the term. B. The premium will be level for the first few years of the policy, but will increase by the 10th year C. The premium will remain level for 10 years. D. The premium will remain the same at renewal. Level premium term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be adjusted to the insured's age at the time of renewal.

The premium will remain level for 10 years.

Under what circumstances will the contingent beneficiary receive the death benefit? A. If the primary beneficiary dies before the insured B. If the tertiary beneficiary dies before the insured C. If designated by the insured D. If designated by the primary beneficiary The only way the contingent beneficiary will receive the death benefit is if the primary beneficiary dies before the insured.

A. If the primary beneficiary dies before the insured

To be valid an insurance policy must have all of the following EXCEPT A. Acceptance B. Consideration C. Offer D. Countersignature an insurance policy is a contract. in order to be enforceable in court, a contract must have consideration, offer, acceptance and a legal purpose.

D. Countersignature

How does insurance distribute the financial consequences of individual losses? A. It transfers the risk to associates of the insured. B. It transfers the risk to a small number of persons insured. C. It transfers the risk to all persons inured D. It retains the financial consequences. insurance is the transfer of the possibility of a loss (risk) to an insurance company, which in turn spreads the costs of unexpected losses to many individuals. In most situations, only a small number of those insured will actually suffer a loss. Insurance redistributes the financial consequences of individual losses to all persons insured.

It transfers the risk to all persons insured

Which of the following is the primary source of information that an insurer uses to evaluate an insured's rick for life insurance? A. Insurance application B. Risk analysis C. The law of large numbers D. Agent's report Insurance application is the data-gathering tool utilized in evaluating an individual risk.

A.Insurance application

Under what circumstance may an insurer pay a finder's fee to an unlicensed producer? A. Under no circumstance B. Under any circumstance C. The person has a finder's license D. The fee does not exceed 5% of any collected premium No insurer may pay any compensation, fee, or commission for services as agent or broker unless that person was licensed as an agent or broker at the time of the transaction

A. Under no circumstance

All of the following information needs to be included on an application for life insurance EXCEPT A. The agent's statement if applicable. B. Medical information about the applicant C. Health insurance policies in force. D. Life insurance with other insurers. The information about the applicant's health insurance policies is not material to a life insurance contract.

C. Health insurance policies in force.

What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death? A. Last Survivor B. Survivorship Life C. Joint Life D. Second-to Die Joint Life is a single policy that is designed to insure two or more lives. The death benefit is paid upon the first death only Survivorship Life (also referred to as second-to die" or "last survivor" policy) is much the same as join life in that it insures two or more lives for a premium that is based on a joint age, and pays out at the second death.

C. Joint Life

All of the following are true about Group Life insurance EXCEPT A. The employer is the beneficiary. B. The employer is the beneficiary. C. It is usually written as annual renewable term insurance. D. Evidence of insurability is usually not required. The employee, as the insured, may designate any beneficiary they so desire, which would usually be either their spouse or children.

B. the employer is the beneficiary.

A whole life policy that will generate immediate cash value is a A. Limited-pay policy. B. Single premium policy. C. Continuous premium policy. D. variable life policy. A whole life policy that will generate immediate cash value is a single premium policy

B. Single premium policy.

Which of the following losses would likely be covered under the Accidental Death rider? A. Mountain-climbing accident. B. Death resulting from a long-term disability. C. Death caused by a head-on collision. D. Suicide. Accidental Death rider pays some multiple of the face amount if death is the result of an accident as defined in the policy; it would not, however, include death that results from any health problem or disability, self-inflicted injuries, war, or dangerous hobbies or avocations.

C. Death caused by a head-on collision.

An IRA contribution can be made from which of the following? A. Life insurance B. Collectibles C. Stocks and bonds D. Cash IRA contributions must be made in cash in order to be tax deductible. The money invested in the account can be used to buy stocks, bonds, mutual funds or annuities, The money used for IRA contributions cannot be used to purchase life insurance policies or collectibles such as art, antiques or stamps.

D. Cash

When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as A. Liquidity B. Life settlement C. Estate conservation D. Estate creation Life insurance proceeds can be used to pay for a variety of expenses, including federal estate taxes and state inheritance taxes.

C. Estate conservation.

The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the A. Insuring clause. B. Payment of claims. C. Declarations. D. Consideration. The insuring clause states the insurer's promise to pay the death benefit upon the insured's death and sets forth the basic agreement between the insurer and the insured.

Insuring clause.

An IRA owner who is 57 years old wants to make a withdrawal from her traditional IRA. What penalty will be imposed? A. No penalty B. 6% C. 10% D. 20% Early distributions from an IRA (Prior to age 59 1/2) are subject to a 10% penalty unless exempt.

10%

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done? A. Misrepresentation B. Rebating C. Twisting D. Defamation Misrepresentation is the act of portraying sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This refers to all forms of communication.

A. Misrepresentation

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? A. reduced paid up B. Extended term C. Paid up additions D. Cash surrender value The automatic nonforfeiture option is extended term.

B. Extended term

Which of the following is NOT an indicator of a competent party? A. Mental proficiency B. Comprehension of contract C. Business profession D. Legal age Competent parties to a contract must be of legal age, be mentally competent, have a clear understanding of the contract, and must not be under the influence of drugs or alcohol.

C. Business profession

Which of the following is TRUE of level term insurance? A. The premium will increase or decrease based on current interest rates. B. The policy endows at age 100. C. The policy offers nonforfeiture values. D. It is temporary protection Level term insurance is temporary protection, It is likely renewable at certain (5 year. 10y year etc,) The policy has a maximum renewal age (possibly 80).

D. It is temporary protection.

Which of the following term refers to solicitation, negotiation, effectuation or advising related to an insurance contract? A. Rescission B. Insurable interest C. Insurance transaction D. Advertising The term "insurance transaction" includes solicitation, negotiation, or advising related to an insurance contract.

C. Insurance transaction

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT A. Reports may be sent to anyone who requests one. B. Insurers are not required to give customers a copy of the report. C. It applies to credit reports ordered in connection with insurance, banking and employment. D. The customer must be notified if adverse action is taken as a reslt of a report. Credit reports may only be ordered by those involved in insurance underwriting bank loans or employment, so they cannot be ordered by just anyone. if adverse action is taken, an insurer must tell the insured which credit reporting agency furnished the report, but the insurer does not have to furnish a copy of it. if a report is wrong, there are procedures to get it corrected without the need of filing a lawsuit (litigation).

A. Reports may be sent to anyone who requests one.

Because of an injury, an insured has been unable to work for 7 months. When his life insurance premium came due, he was unable to pay, yet the policy remained in force. The policy includes A. Nonforfeiture options B. Waiver of premium rider. C. Guaranteed insurability benefits. D. Facility of payment clause. The Waiver of Premium rider causes the insurer to waive future premiums if the premium par is disabled for a period beyond 6 months or more.

B. Waiver of premium rider

Answers to questions in an insurance application are called representations and, as such, they are A. Not true. B. Warranties. C. Believed to be true to the best of the applicant's knowledge D. Absolutely true Representations are statements that an insurance applicant believes to be true to the best of his or her knowledge.

C. Believed to be true to the best of the applicant's knowledge

A whole life policy is surrendered for a reduced- paid up policy. The cash value in the new policy will A. Remain the same B. Decrease over time. C. Reduce to the pre-surrender value D. Continue to increase The new policy continues to build its own cash value and will remain in force until the insured's death or maturity.

D. Continue to increase

The reduction of premium option uses the dividend to reduce A. This years premium. B. The previous year's premium. C. The premium on any other policy owned by the policyowner. D. Next year's premium. With the reduction of premium option, the insurer uses the dividend to reduce the next year's premium.

D. Next year's premium.

Who is the annuity owner? A. The person who receives the benefits B. The person on whose life the annuity is written C. The insurer D. The person who purchases the annuity The owner of an annuity is the person who purchases the contract, but does not have to be the one who receives the benefits.

D. The person who purchases the annuity.

Don recently left his employer due to a personal situation. Don carried life insurance through the employer. Which of the following NOT true regarding Don's life insurance options? A. Don must apply for coverage within 31 days of leaving employment. B. The individual policy premiums will be based on. Don's current age and risk CLASS. C. Don can purchase individual life insurance without proof of insurability from the company that provided his company group plan D. The individual policy may be any form of life insurance that the company markets. the individual policy can be any form of coverage except term coverage.

D. The individual policy may be any form of life insurance that the company markets.

The family term rider incorporates A. Key person whole life and dependents term. B. Cost of living rider and family protection rider. C. Spouse term and children's term D. Whole life and other-insured term A single rider that provides coverage on every family member is called a "family rider," it incorporates the spouse term rider and the childrens term rider.

C. Spouse term and children's term

Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insureds death was caused by an accident as defined in the policy A. A Double Indemnity Rider B. A Guaranteed Insurability Rider C. A Covered Peril Rider D. An Accidental Death Rider The Accidental Death Rider pays some multiple of the face amount if death is the result of an accident as defined in the policy.

D. An Accidental Death Rider

The entire contract includes all of the following EXCEPT A. A copy of the application. B. Any riders or amendments. C. A buyer's guide. D. The life insurance policy The entire contract includes 1. the policy, 2. A copy of the application and 3. any riders or amendments.

C. A buyer's guide.

What is the main purpose of regulating life and annuity marketing practices? A. To establish minimum rates for life insurance policies and annuities B. To reduce the marketing abilities of private insurers C. To provide consumers with choices in life insurance products D. To assure that advertisements are not untrue or misleading The purpose of regulating life and annuity marketing practices is to establish for insurers and agents minimum standards of conduct and to assure that advertisements, solicitations, replacements, and sales of life insurance and annuities are not untrue, deceptive, or misleading.

D. To assure that advertisements are not untrue or misleading.

When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true? A. Joint Life has a lower premium than the total of the two individual policies B. Joint Life has a premium that is identical to the sum of the two individual policies. C. The Joint Life premium can only be paid monthly. D. Joint Life has a higher premium than the total of the two individual policies. Since Joint Life only pays one death benefit (at the first death) Its premiums is less than the total of two individual policies.

A. Joint Life has a lower premium than the total of the two individual policies.