Life exam
Which of the following is an important underwriting principle of a group life insurance?
Everyone must be covered in the group
Which requirement must be met for an association to be eligible for a group life plan?
Group was formed for a purpose other than acquiring insurance
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will void a policy
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?
If the primary beneficiary dies before the insured
The type of annuity that can be purchased with one monetary deposit is called a(n)
Immediate annuity
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty tax on $30,000
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
All of these statements about the Waiver of Premium provision are correct EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
A policyowner's rights are limited under which beneficiary designation?
Irrevocable
Which of the following statements is CORRECT about the period in which a term policy can be converted?
It varies according to the contracts
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
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
Which of the following best describes a contingent beneficiary?
Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
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
What benefit does the payor clause on a juvenile life policy provide?
Premiums are waived if payor becomes disabled
If a producer chooses to conduct business under an assumed name, when must notification be given to the Commissioner?
Prior to using the assumed name
The investment gains from a universal life policy usually go toward:
cash value
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
conditional
In life insurance, the needs approach is used mostly to establish:
how much life insurance a client should apply for
Which of the following actions require a policyowner to provide proof of insurability in an adjustable life policy?
increase face amount
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
In a key employee life insurance policy, the third-party owner can be all of the following, EXCEPT
insured
A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need?
irrevocable
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
level
What kind of premium does a Whole Life policy have?
level
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the
marital deduction
Whole life insurance policies are contractually guaranteed to provide each of the following, EXCEPT
partial withdrawal features beyond a surrender charge period
Which life insurance rider typically appears on a Juvenile life insurance policy?
payor benefit rider
A level premium indicates
the premium is fixed for the entire duration of the contract
One becomes eligible for Social Security disability benefits after having been disabled for
5 months
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 months
How long must a replacing insurer maintain the records of a replacement transaction?
5 years
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?
50%
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase
A Whole Life Policy with an Other Insured Rider
Which of these is an element of a variable life policy?
A fixed, level premium
Which of these is not a reason for a business to buy key person life insurance?
A pension deficiency if the key employee dies
An incomplete life insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing agent
Traditional individual retirement annuity (IRA) distributions must start by:
April 1st of the year following the year the participant attains age 70 1/2
What action can a policyowner take if an application for a bank loan requires collateral?
Assign policy ownership to the bank
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be paid the Death Benefit
What provision in a life insurance policy states that the application is considered part of the contract?
Entire Contract provision
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
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
All of the following statements about traditional individual retirement accounts are false except
10% penalty is applied to withdrawals before age 59 1/2
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
A life insurance application must be signed by all of these, except
beneficiary
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
Risk classification
Which of the following is a characteristic of a variable annuity?
Underlying equity investments
Which of the following types of policies best identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, an expense flavors?
Universal life
Which of the following policies combines investment choices with a form of term coverage?
Variable Universal Life
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
A return of premium life insurance policy is:
Whole life and Increasing term
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
unilateral
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
variable
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
waived one of its legal rights
Which of these is considered a statement that is assured to be true in every respect?
warranty
A life insurance policy that provides a policyowner with cash value along with a level face amount is called:
whole life
A policy that becomes a Modified Endowment Contract (MEC)
will lose many of its tax advantages
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
A producer must remit premiums to the insurer within ___ days after receipt.
45 days
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
50,000
Which of the following types of policies pays a benefit if the insured goes blind?
AD&D
Which of the following is NOT included in an annuity contract?
AD&D rider
The Consideration clause in a life insurance contract contains what pertinent information?
Amount of premium payments and when they are due
An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called
An installment Refund annuity
An applicant's medical information received from the medical information bureau (MIB) may be furnished to the:
Applicant's physician
Which of these is not considered to be a cost connected with an individual's death?
Business expense
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
Claims are denied under the Suicide clause of the policy
Which of the following is not a problem when existing life insurance is replaced with new coverage?
Comprehensive coverage may increase under the new policy
Insurance contracts are known as _____ because certain future conditions or acts must occurs before any claims can be paid
Conditional
The universal life policy is called an unbundled life policy because the policyholder can see the expense charges, the interest earned, and the:
Cost of insurance
Credit life insurance is typically issued with which of the following types of coverage?
Decreasing term
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing term
When recommending the purchase or exchange of an annuity, a producer must determine the suitability of the purchase by performing all of the following except
Determining the marital status of the applicant
K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?
Endowment at Age 65
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
Which of these statements describe a modified endowment contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
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
S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?
Full benefits are payable under the Master contract
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums
What is considered a valid reason for small businesses to insure the lives of its major shareholders?
Fund a buy-sell agreement
An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors?
Gender
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
If Tom's employment is terminated, 20% of the funds would be forfeited
W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)
Immediate annuity
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
Which of the following statements about accumulated interest earned on dividends from an insurance policy is true?
It is taxed as ordinary income
Which plan is intended to be used by a sole proprietor and the employees of that business?
Keogh Plan
L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances?
L's spouse dies at age 66.
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
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:
Limited pay life
Which of these is not relevant when determining the amount of personal life insurance needed?
Local unemployment rate
Which of these is an element of s single premium annuity?
Lump-sum payment
To be valid, a group life insurance policy
May not be issued to a group formed solely for the purpose of obtaining insurance.
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
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?
Owner's Rights
All of the following statements are true regarding s policy's grace period, EXCEPT
Past due premiums are waived
Which statement is true in regards to a policy loan?
Past-due interest on a policy loan is added to the total debt
Which of the following provisions guarantees that the premiums will be waived if a juvenile life policyowner becomes disabled?
Payor clause
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?
Portion of the premiums paid for by the employer may be a tax deduction
What is the consideration given by an insurer in the consideration clause of a life policy?
Promise to pay a death benefit
Which of the following is required for a life insurance lapse notice?
Reason stated why the policy will lapse
Which of these Nonforfeiture Options continue a build-up of cash value?
Reduced Paid-Up
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?
Reinstatement provision
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?
Revocable
What does a 401(k) plan generally provide its participants?
Salary-deferral contributions
Which of these factors do NOT influence an applicant's need for life insurance?
Self-maintenance expenses
An immediate annuity consists of a
Single Premium
Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?
Split-dollar plan
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term life
What kind of life insurance product covers children under their parent's policy?
Term rider
What would the Medical Information Bureau (MIB) identify?
Testing positive for marijuana use from a previous screening
Which of the following factors affects the amount of monthly disability benefits payable under social security?
The amount of the benefits available from other sources
On delivery if a policy, a signed statement of good health is typically requested if:
The application was submitted without the initial premium
If an annuity is terminated prior to beginning of the income payment period, the contract owner receives
The contract surrender value at that time
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:
The cost
When applied to Whole Life insurance, the word "straight" denotes
The duration of premium payments
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?
The full face amount
Which of the following statements regarding a tax sheltered annuity (TSA) is INCORRECT?
The income from the TSA is received income tax-free
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
The initial premium
Which of the following characteristics is correct about interest sensitive whole life?
There is a flexible premium payment
The common disaster clause provides that if both the insured and the sole named beneficiary were to die in a common accident, which of the following is true?
This clause provides the payment of proceeds to the insured's estate
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
The commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances except
Writing controlled business
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
A qualified profit-sharing plan is designed to
allow employees to participate in the profits of the company
Which premium schedule results in the lowest cost to the policyowner?
annual
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
annuity
Which type of contract liquidates an estate through recurrent payments?
annuity
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
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
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
conversion
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
conversion
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be
converted to an individual permanent policy at an individual rate
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
employee
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
In a life insurance policy, which feature states that the policy will not cover certain risks?
exclusion
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?
exclusion
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
exclusion
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
exclusion for the medical condition
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
What kind of special need would a policyowner require with an Adjustable Life insurance policy?
flexible premiums
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
free-look period has expired
Credit life insurance is:
issued in an amount not to exceed the amount of the loan
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
An individual who purchases a life annuity is given protection against:
the risk of living longer than expected