Life Insurance Guaranteed Exam

How long is the grace period for an individual life insurance policy?

1 Month

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

According to the law of agency, insurance producers represent?

Insurers

Key person insurance can provide protection for all the following economic losses to a business except?

Pay the death benefit to the estate of the insured

Which of the following are characteristics of term life insurance?

Temporary protection, renewability, no cash value

Which statement is an accurate description of life insurance policy dividends?

They are not taxable and are not guranteed

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 accident as defined in the policy?

An accidental death rider

A policy owner no longer needs a life insurance policy and agrees to sell it to a third party for more than its cash value. This type of transaction is called ?

Life Settlement

When assuming the needs for life insurance, an individual may use retention which means?

Maintaining assets at death

An aleatory contract is based on what kind of exchange?

Unequal exchange of values

When an insured terminates membership in the insured group, the insured can convert to?

Whole life without proof of insurability

An insurer must notify the consumer in writing that an investigative consumer report has been requested within how many days of the initial request?

3 days

An IRA contribution can be made from which of the following?

Cash

A married couple purchases life insurance on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should the agent recommend?

Payor benefit

what is the difference between a straight lifepolicy and a20-pay whole life policy?

Premium payment period

All of the following are consideration in an insurance policy except?

The cash value in the policy

All of the following statements about indexed whole life insurance are correct except?

The death benefit is not guranteed

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. what is the insurance company course of action?

Deny any payment of death benefit

How often must insurers send policyowners status reports on policies that use illustrations?

Every year

FICA tax applies to which of the following?

Social Security

The family term rider incorporates

Spouse term and children's term

Which of the following statements is incorrect concerning Modified Endowment Contracts?

AN MEC must always pass the 7-pay test

Which of the following is true of level term insurance?

It is temporary protection

When comparing a joint life policy to two individual life policies of the same amount on the same insureds, which condition is true?

Joint life has lower premium that the total of the two individual policies

A person with a history of DUI's represents what type of hazard to the insurer?

Morale

Which type of authority is found in the agent's contract?

Express

Which of the following is not a component of an insurance policy premium?

Number of beneficiaries

S set up individual retirement account that her employers now contributing to. Her employer's contributions are include in her gross income. What kind of retirement plan does S have?

Simplified Employee Pension (SEP)

According to the common disaster clause, if the insured and primary beneficiary are killed in the same accident and it can not be determined who died first. What will be assumed?

The primary beneficiary died before the insured

If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?

Retention

Which of the following would not trigger the accelerated death benefits?

Being permanently disabled

Which of the following represents rebating?

A producer returning part of her commission to her client as an inducement to buy

Insurance contracts are unilateral in nature. What does that mean?

Only one party makes a promise

Which of the following is a provision found in life insurance policies?

Reinstatement

Which o the following is not required to be included in a disclosure document for an annuity?

A document describing the different types of annuities

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

A policy is reissued with a reduction in cash value

Which of the following would be true of both fixed period and fixed amount settlement options?

both guarantee that the principal and interest will be fully paid

All of the following are true of group life insurance except?

The insureds each own their own contract

Which of the following could reduce the amount of the death benefit?

Failure to repay a policy loan

Which of the following is a correct statement about annuities?

Fixed annuities do not provide protection against inflation

Who does the spendthrift clause in a life insurance policy protect?

The Beneficary

Which of the following would not be eligible for coverage under key person?

The owner of a shop

A whole life policy is surrender for a reduced-paid up policy. The cash value will

Continue to increase

When a settlement option is chosen at death, how are the monthly payments taxed?

The principal portion is generally income tax-free while the interest portion is taxed as ordinary income

When a replacement is involved, how long must existing insurers maintain records of replacement notifications?

5 years

A jumping juvenile policy is unique in that the death benefit automatically?

Increases at a predetermined age

Dividends received on participating life insurance policies are?

Not taxable because they are a return of unused premiums

Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?

Occupation

What type of interest rate is guaranteed in universal life polices?

Contract interest rates

A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage is payed. The most inexpensive type of policy that would accomplish this need would be?

Decreasing term

cash value guarantees in a whole life policy are called

Nonforfeiture values

Which of the following is consideration on the part of the insurer?

Paying a claim

An insurer operates for one or more social, educational, charitable, benevolent, or religious purposes for the benefit of its members is known as?

Fraternal insurer