life insurance exam

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report A. Are entitled to obtain a copy of the report from the party who ordered it B. Must be advised that a copy of the report is available to anyone who request it C. May sue the reporting agency in order to get inaccurate data corrected D. Must be informed of the source of the report

D. Must be informed of the source of the report

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an A. Interest-sensitive Whole Life B. Credit Life C. Annual Renewable Term D. Adjustable Life

A. Interest-Sensitive Whole Life

In insurance, an offer is usually made when A. The completed application is submitted B. The insurer approves the application and receives the initial premium C. The agent hands the policy to the policyholder D. An agent explains a policy to a potential applicant

A. The completed application is submitted

What type of life insurance is most commonly used for group plans? A. annually renewable term B. whole life C. flexible premium whole life D. decreasing term

A. annually renewable term

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? A. each child covered must show evidence of insurability B. It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age C. it is permanent insurance D. the policy covers only the natural children of the insured

B. it is term coverage that is convertible insurance at or prior to the child reaching the maximum coverage age

Which of the following is INCORRECT regarding a $100,000 20-year level term policy? A. The policy premiums will remain level for 20 years B. If the insured dies before the policy expired, the beneficiary will receive $100,000 C. The policy will expire at the end of the 20-year period D. At the end of 20 years, the policy's cash value will equal $100,000

D. At the end of 20 years, the policy's cash value will equal $100,000

In terms of parties to a contract, which of the following does NOT describe a competent party? A. The person must not be under the influence of drugs or alcohol B. The person must be of legal age C. The person must be mentally competent to understand the contract D. The person must have at least completed secondary education

D. The person must have at least completed secondary education

What is the purpose of establishing the target premium for a universal life policy? A. To accumulate cash value faster B. To pay up the policy faster C. To cover all policy expenses D. To keep the policy in force

D. To keep the policy in force

all of the following statements concerning dividends are true EXCEPT A. lower insurance company costs generate higher dividends B. they stem from favorable underwriting experience C. favorable investment results generate higher dividends D. dividend amounts are guaranteed in the policy

d. dividend amounts are guaranteed in the policy

The Federal Fair Credit Reporting Act A. Regulates consumer reports B. Protects customer privacy C. Regulates telemarketing D. Prevents money laundering

A. Regulates consumer reports

The term "illustration" in a life insurance policy refers to A. A presentation of non guaranteed elements of a policy B. Depiction of policy benefits and guarantees C. Pictures accompanying a policy D. Charts and graphs

A. A presentation of nonguaranateed elements of a policy

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A. As of the application date B. As of the policy deliver date C. As of the first of the month after the policy issue D. As of the policy issue date

A. As of the application date

Which policy component decreases in decreasing term insurance? A. Face amount B. Cash value C. Dividend D. Premium

A. Face amount

All other factors being equal, what would the premium be like in a survivorship life policy as compared tot he premium in a joint life policy? A. Lower B. Higher C. as high D. half the amount

A. lower

a rider attached to a life insurance policy that provides coverage on the insured's family members is called the A. Other-insured rider B. change of insured rider C. juvenile rider D. Payor rider

A. other-inured rider

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A. require evidence of insurability B. require a higher premium C. prolong the open enrollment period D. increase medical requirements on existing members

A. require evidence of insurability

What type of insurance would be used for a Return of Premium rider? A. annually renewable term b. increasing term c. level term d. decreasing term

b. increasing term

Which of the following types of risk will result in the highest premium? A. Substandard risk B. Standard risk C. Preferred risk D. All risks pay equal premiums

A. Substandard risk

Which of the following policies will provide permanent protection? A. Whole life B. Credit life C. Term life D. Group life

A. whole life

Which of the following will be included in a policy summary? A. Copies of illustrations and application B. Comparisons of similar policies C. Primary and secondary beneficiary designations D. Premium amounts and surrender values

D. Premium amounts and surrender values

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant and t submit a medical exam. If the policy was issued, what would be the policy's effective date? A. The date of policy delivery B. The date of the Issue C. The date of application D. The date of the medical exam

D. The date of the medical exam

Regarding the free-look provision, the insurance company A. Must issue a free policy for 10 days B. must allow the policy owner to return the policy for a full refund C. Cannot charge a premium after 10 days D. must issue a free policy for 30/31 days

B. Must allow the policy owner to return the policy for a full refund

If an agent wishes to sell variable life policies, what license must he agent obtain? A. Surplus Lines B. Personal Lines C. Securities D. Adjuster

C. Securities

which type of insurance is based on mutual agreements among subscribers? A. limited liability B. reinsurance C. reciprocal insurance D. mutual insurance

C. reciprocal insurance

If an immediate annuity is purchased with the face amount at dead for wit the cash value at surrender, this would be considered a A. nonforfeiture optino B. a rollover C. settlement option D. nontaxable exchange

c. settlement option

Which two terms are associated directly with the premium? A. Renewable or convertible B. level or flexible c. fixed or variable d. term or permanent

B. level or flexible

Which statement is NOT true regarding straight life policy? A. Its premium steadily decreases over time, in response to its growing cash value B. The face value of the policy is paid to the insured at age 100 C. It usually develops cash value by the end of the third policy year D. It has the lowest annual premium of the three types of Whole Life policies

A. Its premium steadily decreases over time, in response to its growing cash value

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A. Upon conversion, the death benefit of the permanent policy will be reduced by 50% B. Evidence of insurability is not required C. Most term policies contain a convertibility option D. Upon conversion, the premium for the permanent policy will based upon the attained age

A. Upon conversion, the death benefit of the permanent policy will be reduced by 50%

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? A. Consideration clause B. insuring clause C. Entire contract clause D. beneficiary clause

B. insuring clause

which life insurance settlement option guarantees payments for hotel lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies; the payments will continue to a designated beneficiary? A. fixed-amount B. life income with period certain C. joint and survivor D. single life

B. life income with period certain

What is the advantage of reinstating a policy instead of applying for a new one? A. the cash values have gained interest while the policy was lapsed B. the original age is used for premium determination C. proof of insurability is not required d. the face amount can be increased

B. the original age is used for premium determination

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? A. Flexible premium B. Immediate C. Deferred D. Fixed

C. Deferred

Which of the following is NOT true regarding the annuitant? A. The annuitant receives the annuity benefits B. The annuitant must be a natural person C. The annuitant cannot be the same person as the annuity owner D. The annuitants life expectancy is taken into consideration for the annuity

C. The annuitant cannot be the same person as the annuity owner

Which of the following is NOT the consideration in a policy? A. The premium amount paid at the time of application B. The promise to pay covered losses C. The application given to a prospective insured D. Something of valued exchanged between parties

C. The application given to a prospective insured

A Straight Life policy has what type of premium? A. a decreasing annual premium for the life of the insured B. A variable annual premium for hotel life of hate insured. C. A level annual premium for the life of the insured D. an increasing annual premium for hotel life of the insured

C. a level annual premium for the life of the insured

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation ay have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She will likely purchase a(n) A. Variable Annuity B. Flexible Annuity C. Immediate Annuity D. Equity Indexed Annuity

D. Equity Indexed Annuity

A life insurance policy has a legal purpose if 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

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? A. It will likely be the average premium issued to standard risks B. The applicant's habits and health do not affect the premiums C. It will likely be lower because the applicant is a preferred risk D. It will likely be higher because the applicant is a substandard risk

D. It will likely be higher because the applicant is a substandard risk

When would a 20-pay whole life policy endow? A. At the insured's age 65 B. After 20 payments C. In 20 years D. When the insured reaches age 100

D. When the insured reaches age 100

Which type of life insurance policy allows the policy owner to pay more or less than the planned premium? A. Universal life B. Variable life C. Decreasing term D. Straight whole life

A. Universal life

All of the following examples of third-party ownership of a life insurance policy EXCEPT A. an insured borrows money from the bank and makes a collateral assignment of a part of the dead benefit to secure the loan B. an insured couple purchases a life insurance policy insuring the life of their grandson C. a company purchase life insurance policy on their manager who is an important part of the operation D. When an insured purchased a new home, they insured made an absolute assignment of a life insurance policy the mortgage company

A. an insured borrows money from the bank and make collateral assignment of a part of the death benefit to secure the loan

Level 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 time, the policy premium will be A. Discounted B. Adjusted to the insured's age at the time of renewal C. Determined by the health of the insured D. Based on the issue age of the insured

B. Adjusted to the insured's age at the time of renewal

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident, how much will his wife receive from the policy? A. Nothing B. $50,000 C. $100,000 D. $200,000

C. $100,000

the insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killer in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies the the dead must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? A. 0 B. 50,000 C. 100,000 D. 300,000

C. 100,000

Something of value exchanged between the insurer and the insured is considered an A. Acceptance B. Legal capacity C. Consideration D. Offer

C. Consideration

The term "fixed" in a fixed annuity refers to all of the following EXCEPT A. Equal annuity payments B. Amount and length of payments C. Death benefit D. Guaranteed rate of interest

C. Death benefit

An agent selling variable annuities must be registered with A. The Guaranty Association B. SEC C. FINRA D. Department of Insurance

C. FINRA

What does "level" refer to in level term insurance? A. cash value B. interest rate C. Face amount D. Premium

C. Face amount

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? A. Ordinary life policy B. Limited pay whole life C. Level term D. Term to specified age

C. Level term

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as A. The policy owner cannot skip premiums without the policy lapsing B. The next month's premium is sufficient to cover both the current premium amount and the skipped amount C. The policy contains sufficient cash value to cover the cost of insurance D. The previous payments were high enough to create an excess premium

C. The policy contains sufficient cash value to cover the cost of insurance

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A. The premium B. The amount of insurance C. The type of investment D. the length of coverage

C. The type of investment

What are the two components of a universal policy? A. Mortality cost and interest B. Separate account and policy loans C. Insurance and cash account D. Insurance and investments

C. insurance and cash account

All of the following are true regarding insurance policy loans EXCEPT A. the policy will terminate if the loan plus interest equal or exceeds the cash value of the policy B. policy owners can borrow up to the full amount of their whole life policy's cash value C. policy loans can be made on the policies that do not accumulate was value D. the amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies

C. policy loans can be made on policies that do not accumulate cash value

An agent selling variable annuities must be registered with A. Department of Insurance B. The Guaranty Association C. SEC D. FINRA

D. FINRA

Which Universal Life option has a gradually increasing cash value and a level death benefit? A. Juvenile life B. Term insurance C. Option B D. Option A

D. Option A

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must A. Defend the report if the agency feels it is accurate B. Change the report C. Send an actual certified copy of the entire report to the consumer D. Respond to the consumer's complaint

D. respond to the consumer's complaint

All of the following statements are correct regarding Credit Life Insurance EXCEPT A. Benefits are paid to the borrower's beneficiary B. the amount of insurance permissible is limited per borrower C. premiums are usually paid by the borrower D. benefits are paid to the creditor

A. benefits are paid to the borrowers beneficiary

Which of the following is TRUE regarding the annuity period? A. It may last for hotel lifetime of the annuitant B. During this period the annuity payments grow interest ax deferred C. It also referred to as the accumulation period D. it is the period of time during which the annuitant makes premium payments into the annuity

A. It may last for the lifetime of the annuitant

All of the following statements are true regarding group insurance EXCEPT A. participants in the policy each receive a policy B. the group sensor is the policyholder C. participating in a group insurance plan are issued certificates of insurance D. small groups such as labor unions are eligible for group insurance

A. participants in the policy each receive a policy

Which of the following statements about group life is correcT? A. the policy can be converted to an individual term insurance policy B. the cost of coverage is based on the ration of men and women in the group C. the premiums are higher than in an individual policy because there is no medical exam D. the group sponsor receives a Certificate of Insurance

B .the cost of coverage is based on the ratio of men and women in the group

All of the following are true about variable products EXCEPT A. Policyowners bear the investment risk B. the premiums are invested in the insurer's general account C. the minimum death benefit is guaranteed D. the cash value is not guaranteed

B. the premiums are invested in the insurer's general account

Which of the following best describes fixed-period settlement option? A. the death benefit must be paid out within a certain time period. B. income is guaranteed for the life of the beneficiary C. both the principal and interest will be liquidated over a selected period of time D. only the principal amount will be paid out within a specified period of time

C. both the principal and interest will be liquidated over a selected period of time

All of the following are true regarding the guaranteed insurability rider EXCEPT A. the insured may purchase additional insurance up to the amount specified in the base policy B. it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events C. this rider is available to all insured with no additional premium d. the insured may purchase additional coverage at the attained age

C. this rider is available to all insureds with no premium

A married couple owns a permanent policy which covers both of their lives and pays the benefit only upon the death of the first insured. Which policy is that? A. Survivorship Life Policy B. Second-to-Die C. Family income policy D. Joint life policy

D. Joint life policy

Your client wants both protection and savings from life insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client A. Interest-sensitive whole life B. Life annuity with period certain C. Increasing term D. Limited pay whole life

D. Limited pay whole life

All of the following are true regarding decreasing term policy EXCEPT: A. It has a lower premium than level term B. the contract pays only in the event of dead during the term and there is not cash value C. the face amount steadily declines through the duration of the contract D. The payable premium amount steadily declines throughout the duration of the contract

D. The payable premium amount steadily declines through the duration of the contract

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? A. On the designated effective date B. On the application date C. when the agent submits the application to the company and the company issues a conditional receipt D. when the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

D. When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

Which the following licenses are not compensated directly related to the amount of insurance sold? A. insurance company B. insurance producer C. insurance broker D. insurance consultant

D. insurance consultant

Which of the following is true about the mandatory free look in a Life insurance policy? A. it commences when the application is signed B. it applies only to term life insurance policies C. it is optional on all life insurance policies It commences when the policy is delivered

D. it commences when the policy is delivered

Which of the following is NOT true regarding a Certificate of Authority A. it may be necessary for transacting business in a specific state B. It is equivalent to an insurance license C. it is issued y the state department f insurance D. it is issued to group insurance participants

D. it is issued to group insurance participants

In group life policies, a certificate of insurance is given to A. the policy holder to keep on file B. Each insured person C. The group sponsor D. The insurance producer

B. each insured person

Which of the following best describes annually renewable term insurance? A. it requires proof of insurability at each renewal B. Neither the premium nor the death benefit is affected by the insured's age C. it provides an annually increasing death benefit D. It is level term insurance

D. it is level term insurance