insurance test

which of these is not a type of authority

principal

An insured is restored to the same condition as before a loss. This is known as

principal of indemnity

Which life insurance settlement option guarantees a lifetime income stream to the beneficiary?

pure life income

A beneficiary may be named by a policyowner as

revocable or irrvocable Correct. A life or health insurance policyowner may name a beneficiary revocably or irrevocably.

Which of the following services is NOT covered under a hospitalization expense policy?

surgeon's fees

Employees of public schools and certain nonprofit organizations are eligible for a deferred tax arrangement called a(n)

tax sheltered annuity Incorrect. The correct answer is "tax sheltered annuity". A tax sheltered annuity is a deferred tax arrangement available to employees of public schools and certain nonprofit organizations.

Under a key person disability policy,

the premiums are NOT tax deductible

If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations EXCEPT

the state prohibits it by law

Which of the following BEST describes how pre-admission certifications are used?

used to prevent nonessential medical costs

Under COBRA, an individual has ___ days to elect continuation of benefits after being notified of eligibility.

60

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a

$25,000 individual whole life policy

The automatic premium loan provision is designed to

avoid a policy lapse Correct. The purpose of the automatic premium loan is to keep the policy from lapsing.

All of these statements are true regarding flexible spending accounts EXCEPT

employer funded

which of the following entities is best known to standardize insurance laws between the states?

NAIC

which agency is responsible for helping to standardize state insurance law across the country

NAIC National Association of Insurance Comissioners

Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)?

PPO's are NOT a type of managed care system

Which Medicare plan pays for prescription drugs?

Part D

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if the payor becomes disabled Incorrect. The correct answer is "Premiums are waived if the payor becomes disabled". The Payor clause of a juvenile life policy provides a waiver of premiums if the payor becomes disabled.

Which statement regarding a Key Employee Life policy is NOT true?

The beneficiary is named by the key employee

The Notice of Claims provision requires a policyowner to

The correct answer is "notify an insurer of a claim within a specified time". The Notice of Claims provision spells out the insured's duty to provide the insurer with reasonable notice in the event of a loss.

An insurer may deny a health insurance claim because of material misrepresentation on the application. Which policy provision provides a time period during which this can occur?

Time limit of certain defenses

Which of the following phrases refers to the fees charged by a healthcare professional?

Usual, customary, and reasonable expenses

Which type of life insurance policy typically contains cash value?

Whole Life

All of the following conditions are typically covered in a long-term care insurance policy EXCEPT

Alcohol dependency

Jackie is a business owner who purchased an insurance policy that covers business expenses to continue operations in the event of her becoming disabled. This type of coverage is called

Business overhead expense Correct. Business overhead expense insurance covers business expenses to continue operations when the owner is disabled.

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

Correct. Usual, customary, and reasonable (UCR) charges are the maximum amount the insurer will consider eligible for reimbursement under a health insurance plan.

Jerry's disability policy states that no new elimination period is needed if the disability recurs within 60 days. Jerry was disabled from an automobile accident, returns to work for 4 months, and then suffers the same type of disability. Which statement is correct?

Incorrect. The correct answer is "The second disability is considered a new event". Because the second disability recurred after 60 days from the first, a new elimination period is needed.

An employer would have a non-qualified retirement plan because

Incorrect. The correct answer is "participation in the plan is limited to select employees". A qualified retirement plan cannot be limited to only select employees.

Which plan is intended to be used by a sole proprietor and the employees of that business?

Keogh Plan

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

Reinstatement clause. Correct. In cases where a policyowner wishes to reinstate a lapsed policy, the reinstatement provision allows the policyowner to do so with some limitations

Which of the following is the primary source of funding for Medicare Part A?

SOCial security payroll taxes

Which statement regarding a life insurance spendthrift clause is true?

Spendthrift clause is selected at the time of application

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age

P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?

a recurrent disablility

An assignee receives full control over an insurance policy. This is called a(n) ____ assignment.

absolute Correct. An assignment in which the assignee receives full control over the policy is called an absolute assignment.

Which provision is NOT a requirement in a group life policy?

accidental Correct. An AD&D provision is not required in a group life policy.

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

at the time of the application

All health insurance policies are required to have a reinstatement provision. The reinstatement provision

allows the insured to reinstate a lapsed policy

Which type of contract liquidates an estate through recurrent payments?

annuity

Under COBRA, a terminated employee may have continuation of group health insurance

by paying no more than 102% of the original premium Incorrect. The correct answer is "by paying no more than 102% of the original premium". Under COBRA, the terminated employee or surviving dependents are responsible to pay the premium, which may be up to 102% of the premium that would otherwise be charged.

Which type of HMO requires its subscribers to receive health care services from a specified, limited number of health care providers chosen by the HMO?

closed line panel

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n)

closed panel

Major Medical policies typically

contain deductible and co-insurance

The incontestable clause allows an insurer to

contest a claim during the contestable period Correct. The incontestable clause or provision specifies that after a certain period of time (usually two years from the issue date), the insurer no longer has the right to contest the validity of the life insurance policy so long as the contract continues in force.

insurance polocies offered on a "take it or leave it" basis are considered what ?

contracts of adhesion

An outstanding mortgage debt would be best covered by a(n) ____ insurance policy.

decreasing term Correct. A decreasing term life insurance policy would be most appropriate for covering an outstanding mortgage indebtedness.

Medicare Part A and Part B do NOT pay for

dental work

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

entire contract Incorrect. The correct answer is "Entire contract provision". The entire contract provision, found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. Nothing may be "incorporated by reference," meaning that the policy cannot refer to any outside documents as being part of the contract.

When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is

income

Michael is an agent who represents multiple companies. Michael is considered to be a ?

independent agent

a ________ insurance company is owned by its policy holders

mutual

What type of life insurance are credit policies issued as?

term

Which of these life insurance riders allows the applicant to have excess coverage?

term rider Incorrect. The correct answer is "Term rider". Term riders allow an applicant to have excess life insurance coverage.

a policy of adhesion can only be modified by whom?

the agent

What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?

2 Correct. A qualified Long Term Care policy must stipulate that the insured be incapable of performing at least two of the ADL's without assistance for at least 90 days to qualify for benefits.

Lamont purchased a universal life policy ten years ago with a death benefit of $200,000. If he selected death benefit Option A and his current cash value is $25,000, how much is his true death benefit?

200,000 Incorrect. The correct answer is "$200,000". Universal life insurance Option A pays the face amount of the policy when the insured dies. The death benefit remains level throughout the life of the contract.

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

3,000 Correct. In this situation, the insured is responsible for $1,000 deductible + 20% of the remaining bill = $3,000.

M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force??

45 days

Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?

5

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2 Correct. Traditional Individual Retirement Account (IRA) withdrawals are normally subject to a tax penalty if they are made before the owner reaches age 59 1/2.

The individual most likely to buy a Medicare Supplement policy would be a(n)

68 year old covered by medicare - must be covered by medicare

What percentage of the Primary Insurance Amount (PIA) can be given as a Social Security benefit to an eligible child of a deceased worker?

75% A Social Security benefit of 75% of the Primary Insurance Amount (PIA) is given to an underage child of a deceased worker if the child is: under age 18; under age 19 and in high school full-time; or at any age if disabled before age 22 and remains disabled.

Rob has a health insurance policy that may not be changed in any way by the insurer, nor can it be terminated for reasons other than nonpayment of premiums. This type of policy is considered

A non-cancelable insurance policy is a health or disability policy that may not be changed in any way by the insurer and for which the insurer cannot terminate or refuse continuation of coverage as long as premiums are paid.

P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?

Claim will be denied

An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?

Consideration clause

Which of the following situations does a Critical Illness plan cover?

Correct. Leukemia is a type of cancer and would be covered under a Critical Illness plan.

Jacob's disability policy contains a provision which states that injuries are covered beginning on the policy's first day. However, benefits will NOT be paid for any illness that occurs during the first 30 days from the policy's effective date. This provision is called a(n)

Correct. The probationary period specified in a disability insurance policy is the period of time that must elapse following the effective date of the policy before benefits are payable.

Which of the following BEST describes a Hospital Indemnity policy?

Coverage that pays a stated amount per day of a covered hospitalization Correct. The typical Hospital Indemnity policy pays a stated amount per day of a covered hospitalization.

Pete owns a long-term care policy that provides benefits for ONLY home health care. Which of the following circumstances is NOT covered?

Custodial Care Correct. Every LTC policy that purports to provide benefits only for home health care shall provide benefits for all of these EXCEPT custodial care.

Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy?

Discourages overutilization of the insurance coverage

Which type of coverage specifically pays for the loss of a body limb?

Dismemberment

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?

Each partner must own a policy on the other partners

All of the following statements regarding group life insurance are true EXCEPT

Employees receive their own policy

To sell variable insurance products, an individual must hold a life insurance license and also be licensed through

FINRA Incorrect. The correct answer is "FINRA". To sell variable insurance products, an individual must hold a life insurance license and a Financial Industry Regulatory Authority (FINRA) registered representative's license.

A medical care provider which typically delivers health services at its own local medical facility is known as a

HMO

Which type of provider is known for stressing preventative medical care?

HMO's

For which of the following expenses does a Basic Hospital policy pay?

Hospital room and board

When determining a client's need for life insurance, which approach focuses on an individual's future stream of income?

Human Life Approach Incorrect. The correct answer is "Human life value approach". The human life value approach calculates the amount of money a person is expected to earn over his/her lifetime to determine the face amount of life insurance needed.

Which of these retirement plans can be started by an employee, even if another plan is in existence?

IRA

How are physicians typically compensated under an HMO contract?

Incorrect. The correct answer is "Capitation fees". HMOs primarily compensate physicians under contract through capitation fees.

With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?

Incorrect. The correct answer is "policyowner additional time to pay overdue premiums". The purpose of the Grace Period is to give the policyowner additional time to pay overdue premiums.

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may not be covered for one year

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring Clause Correct. The insuring agreement in a Life insurance contract establishes the basic promise of the insurance company.

Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?

Issue the policy with an altered Time of Payment of Claims provision

Which statement regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances Correct. Third-party ownership of a life insurance policy is widely used in business settings and estate-planning situations.

A husband and wife would like to buy a single life policy that pays a death benefit upon the death of either one of them. Which of the following types of policies would be their best choice?

Joint life Correct. A joint life policy is a single policy that covers two people and provides a death benefit when the first person dies.

Which of the following are NOT managed care organizations?

MIB

The health insurance program which is administered by each state and funded by both the federal and state governments is called

Medicaid

Medigap insurance fills in the gaps in coverage for

Medicare Part A and B

If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?

Medicare supplement

What is the purpose of the Time of Payment of Claims provision?

Prevents delayed claim payments made by the insurer

The individual who provides general medical care for a patient as well as the referral for specialized care is known as a

Primary Care Physician

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?

Send a notice to the MIB that the applicant was declined

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions Correct. In this situation, the producer should schedule another appointment with the applicant to complete the unanswered questions.

Which of the following statements about the classification of applicants is INCORRECT?

Substandard applicants are never declined by underwriters

All of the following are considered to be non-routine dental care EXCEPT

Teeth cleaning and annual exams

An insurer may deny a health insurance claim because of material misrepresentation on the application. Which policy provision provides a time period during which this can occur?

The Time limit of certain defenses provision provides a period during which the insurer may challenge a contract or deny a claim on the grounds of a material misrepresentation on the application.

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times Correct. A guaranteed insurability option in a Whole Life Policy permits the policyowner to purchase, without evidence of insurability, stated amounts of Whole Life insurance at specified times.

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount Correct. In this situation, the Misstatement of Age provision in the policy specifies that the insurance proceeds will be adjusted to a reduced amount.

Which of the following is NOT a factor used in determining annuity premiums?

annuint's annual income

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

annuity

an insurance company's underwriting department has access to all of the following sources of information EXCEPT

applicant's financial records Correct. The applicant's financial records is not a primary source of information available to an insurance company's underwriting department.

Which of the following is the MOST important factor when deciding how much Disability Income coverage an applicant should purchase?

applicant's monthly income

When does a Probationary Period provision become effective in a health insurance contract?

at the policy's inception

What action will an insurer take if an interest payment on a policy loan is not made on time?

automatically add the amount of interest due to the loan balance Correct. Unpaid interest from a policy loan is added to the loan balance if not paid by the due date.

A life insurance application must be signed by all of these EXCEPT

beneficiary

A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?

company x Correct. With Key Person Insurance, the company purchases, owns, pays the premiums and is the beneficiary of the life insurance policy on the key person.

Archie is hospitalized and the insurer monitors his stay to make sure everything is proceeding according to schedule. This review is called

concurrent

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

defered

B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?

disability income

A certificate of insurance from an employee group health insurance program is issued to

each insured employee as evidence of coverage Correct. Under an employee group health insurance program, a certificate of insurance is issued to each insured employee as evidence of coverage

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

fixed deferred

Basic Medical Expense insurance

has lower benefit limits than Major Medical insurance

J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a predetermined price. What type of plan does J belong to?

health maintence organizatin

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?

her group life plan

Which of the following will a Long Term Care plan typically provide benefits for?

home health care

Sheri is the beneficiary of a life insurance claim and has chosen the fixed period life insurance settlement option. Any excess interest over this fixed period will

increase the size of her payments Correct. Under a fixed period life insurance settlement option, excess interest will increase the size of the payments.

which of the following represents multiple companies

independent agent

The benefits of an ___ life insurance policy vary in accordance with changes in the value of some financial index.

index Correct. The benefits of an indexed life insurance policy vary in accordance with changes in the value of some financial index.

when third party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insuranble intrest in the propsed unsured

A "Hospital Indemnity" (Hospital Income) plan pays medical benefits to the

insured

Medical benefits derived from a "Hospital Indemnity" (Hospital Income) plan are paid to the

insured

Which of the following health insurance policy provisions specifies the health care services a policy will provide?

insuring clause The insuring clause identifies the specific type of health care services that are covered by that policy.

which of these arrangements allows one to bypass insurable interest laws?

investor-originated life insurance

Which of the following is an annuity that pays income to two or more persons as long as one of the annuitants is alive?

joint and survivor

T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?

less than $5,000 a month Incorrect. The correct answer is "Less than $5,000 per month benefit regardless of the cause". In a $5,000 per month Disability Income Policy, a covered partial disability will typically result in less than $5,000 per month regardless of the nature of the disability.

The ___ ___ option is considered to be the automatic settlement option.

lump sum

Pre-hospitalization authorization is considered an example of

managed care

An employer who purchases a group insurance policy is considered the

master policyowner

Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)?

more physicans to choose from

A Limited-Pay Life policy has

orrect. In a Limited-Pay Life policy, premium payments are limited to a specified number of years.

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

owners rights Correct. "Owner's Rights" states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy.

The provision that defines to whom the insurer will pay benefits to is called

payment of claims

Which of these is considered a mandatory provision?

payment of claims

Which of these statements concerning an Individual Straight Life annuity is accurate?

payments are made to the annuiant for life

What kind of life insurance product covers children under their parent's policy?

payor benefit Incorrect. The correct answer is "A Term rider". Family plan policies usually cover the family head with permanent insurance and the coverage on the spouse and children is term insurance in the form of a rider.

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

policy loan provision Correct. A policy loan will pay the policyowner an amount that, with interest, does NOT exceed the guaranteed cash value.

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?

ppo

Employees pay Federal Social Security taxes with ____ dollars.

pre tax

Eli is insured and has recently experienced a loss covered by his insurance policy. The policy is designed to restore him to the same financial condition that existed prior to the loss. This concept is known as the

principle of indemnity Incorrect. The correct answer is "principle of indemnity". The principle of indemnity is when an insured is restored to the same financial condition as that which existed prior to the loss.

What is the Suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide Correct. The purpose of a Suicide provision is to protect the insurer against the purchase of a policy in contemplation of suicide.

Annuitants who own variable contracts invest funds that must be in an insurer's

seperate account Incorrect. The correct answer is "separate account". An insurer must hold funds that are invested for insureds or annuitants who own variable contracts in a separate account.

Acceptable risk classifications given by an underwriter include

substandard, standard, or preferred

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

the Straight Life annuity pays the largest monthly benefit to a single annuitant because it is based only on life expectancy, but it creates a risk that the annuitant may die early and forfeit much of the value of the annuity to the insurance company.

What is the primary source of underwriting information during the underwriting process?

the appicant Correct. In the underwriting process, the applicant is the primary source of underwriting information.

Any changes made on an insurance application requires the initials of whom?

the applicant

No Social Security survivor benefits are payable after a deceased worker's youngest child reaches age 16 and before the surviving spouse reaches age 60. This period is called

the blackout period

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium Incorrect. The correct answer is "the initial premium". The Consideration clause states that the policyowner's consideration consists of a completed application and the first initial premium.

Deductibles are used in health policies to lower

the overuse of medial service

T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provision that limits the time period during which the company may dispute a claim's validity is called

time limit on certain defenses

at what point must a life insurance applicant be informed of their rights that fall under the fair credit reporting act?

upon completion of the application

which of these is considered a statement that is assured to be true in every respect?

waranty

Which parts of a life insurance policy are guaranteed to be true?

warranty Correct. Warranties are statements that are considered literally true. A warranty that is not literally true in every detail, even if made in error, is sufficient to render a policy void.

Oprah has a life insurance policy that provides protection until she reaches age 100. What type of insurance policy is this?

whole life

Michael purchased a universal life policy ten years ago with a death benefit of $300,000. If he selected death benefit Option B and his cash value is now $50,000, how much is his current death benefit?

350,000 Incorrect. The correct answer is "$350,000". Under universal life insurance option B, the policy proceeds increase over time and are equal to the cash value plus the death benefit.

One becomes eligible for Social Security disability benefits after having been disabled for

5 months Correct. Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period.

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

50,000

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision

What is considered to be a characteristic of an immediate annuity?

Correct. An immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase.

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered Incorrect. The correct answer is "Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered". The Misstatement of Age provision states an adjustment be made in the amount of insurance if the age of the insured is misstated.

In order to sell variable annuities, an agent must pass a test and be registered with the

FINRA Correct. Due to the dual regulation of variable annuities, an agent who wants to sell variable annuities must pass a test and be registered with FINRA (Financial Industry Regulatory Authority).

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

Pay face amount minus the past due premium Correct. In this situation, the insurer would pay the death benefit less the past-due premium because death occurred within the grace period.

Which of the following factors does NOT have an affect on insurance premiums?

Producer certifications Correct. All of these factors help determine insurance premiums EXCEPT "Producer certifications".

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge Correct. An applicant's signature represents that the statements on the application are true to the best of the applicant's knowledge.

Which type of life insurance policy involves the use of securities?

Variable Correct. Part of the premium in a variable life policy is placed into a separate account, which is invested in a stock, bond, or money market fund.

When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

Void the policy only if it is discovered during the Contestable period and proven to be material

which of these require an offer, acceptance and consideration

a contract

Brett, age 65, owns a $250,000 nonparticipating whole life policy. The policy is paid-up as of today. Ten years ago, he changed his beneficiary after a divorce. When will the cash value reach $250,000?

age 100 Incorrect. The correct answer is "Age 100". Limited-pay whole life policies have level premiums that are limited to a specified number of years. However, the cash value will still equal the face amount at age 100.

The least expensive life insurance premium payment would be a(n) ___ payment

annual An annual contract has the least expensive premium payment of the options provided.

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

collaterall assignment Correct. A policyowner using the Life Insurance policy as collateral for a bank loan normally would make a collateral assignment.

which of the following is the failure of an insurance applicant to disclose a serious health problem during the application process

concealment

Problems are more likely to occur when a(n) ____ is named as beneficiary of a life insurance policy.

estate

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

ex-wife Incorrect. The correct answer is "Ex-wife". D's ex-wife is still the beneficiary of this policy, even though policy ownership has changed to his current spouse.

in an agency contrat, the authority given to the producer is called

express

an insurance applicant must be informed of an investingation regarding his reputation and character accoridng to the

fair credit reporting act

What does the insuring agreement in a Life insurance contract establish?

insurers basic promise Correct. The insuring agreement in a Life insurance contract establishes the basic promise of the insurance company.

which of these is a true statemetn

intentional concelament of material facts is growunds for resciding a policy

How are policyowner dividends treated in regards to income tax?

intrest on accumulations is taxed Incorrect. The correct answer is "Interest on accumulations is taxed". If the dividends exceed the total premium payments for the insurance policy, the excess dividends are considered taxable income.

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

life annuity with period certain

Jimmy owns a life insurance policy in which he has chosen a settlement option that will pay his beneficiary a life income and also guarantees payments for a specified period. This settlement option is called a(n)

life income withe period certain option Incorrect. The correct answer is "life income with period certain option". A life income with period certain option pays the beneficiary a life income and also guarantees payments for a specified period.

Deuce recently applied for life insurance and told the agent he was in good health, when in actuality he is in failing health. Deuce is guilty of committing

misrepresentation

Which of the following types of insureres is owned by its policyholers and pays dividends

mutual or participating

which of these is not considered to be an element of an insurance contract

negotiating

When an employee is terminated, which statement about a group term life conversion is true?

policy proceeds will be paid if the employee dies during the conversion period Correct. An individual must apply for individual permanent coverage within 31 days after the date of group coverage termination. An individual is covered under the group policy during the conversion period.

who elects the governing body of a mutual insurance company?

policyholders

all of the following are statements about a stock insurance compnay are true exectp

policyholders recieve dividends

the consideration clause of an insurance contract includes

the schedule and amount of premium payments

The benefits of a ___ life insurance policy vary in accordance with changes in the value of equity products

variable Correct. The benefits of a variable life insurance policy vary in accordance with changes in the value of equity products.

which of the following terms can be definded as "the voluntary abandoment by a party of a known right"?

waiver

Tom was involved in a motorcycle accident which resulted in the amputation of both arms. His life insurance policy considers his disability total and permanent. Tom's policy contains which rider

waiver of premium rider Correct. Under a waiver of premium rider, the policyowner is relieved of paying premiums in the event of a total and permanent disability