Life insurance mock exam

An insured decides to surrender his $100,000 whole life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable ?

$3,000

The commissioner has the authority to issue a cease and desist order against any person acting as an insurance agent or broker without being licensed. The commissioner may also impose a penalty for each day the order is violated in what amount?

$5,000

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years ?

2 years

How long most an insurer keep records of electronic transmission to customers

5 years

Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will

Be level thereafter

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit ?

Consumer report

The type of term insurance that provides increasing death benefits as the insured ages is called

Increasing term

In this state, what is the primary body of laws established by the state legislature to regular the business of insurance

Insurance code

According to NC insurance code, the term "shall" describes what kind of actions ?

Mandatory "may" permissive

An individual's tendency to be dishonest would be indicative of a ?

Moral hazard

Using class designation for beneficiaries means

Naming beneficiaries as a group

Under a pure life annuity, an income is payable by the company

Only for the life of the annuitant

Which of the following is another term for the accumulation period of annuity?

Pay-in period

The written instrument, in which a contract of insurance is set forth is known as the

Policy

Which of the following must have insurable interest in the insured ?

Policyowner

Regarding the taxation of Business Overhead policies,

Premiums are deductible, and benefits are taxed

Pertaining to insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

Which of the following is the most common way to transfer risk?

Purchase insurance

Events in which a person has both the chance of winning or losing are classified as ?

Speculative risk

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?

Spouse

Which of the following is a risk classification use by underwriters for life insurance?

Standard

A 403(b) plan, commonly referred to a TSA, is available to be used by

Teachers and not-for-profit organizations

If a life insurance policy has an irrevocable beneficiary designation.

The beneficiary can only be changed with written permission of the beneficiary.

If an insured continually uses the automatic premium loan option to pay the policy premium,

The policy will terminate when the cash value is reduced to nothing.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called ?

Waiver of premium

To which of the following products does the Replacement Regulation apply ?

Whole life insurance

An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies. How much will be paid out ?

$50,000

What is the minimum fine for acting as agent for a nonadmitted insurer in the transaction of insurance business?

$500

An insured had a $10,000 life term policy. The annual premium of $200 was due on February 1; However the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

What is the minimum free-look period for newly issue life insurance policies in this state?

10 days

Which of the following would qualify as an implied warranty in an insurance contract?

An oral representation by the applicant

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 ?

As of the application date

What happens when a policy is surrendered for its cash value ?

Coverage ends and the policy cannot be reinstated

Which of the following life insurance policies does NOT build cash value ?

Guaranteed universal life

Not all losses are insurable, and there are certain requirements that must be met before a risk is a prober subject for insurance. The requirements include all of the following EXCEPT

The may be intentional

Which of the following is NOT required on an illustration used in the sale of a life insurance policy?

The name of the primary and secondary beneficiaries

Which of the following is a key distinction between variable whole life and variable universal life products ?

Variable whole life has a guaranteed death benefit

Which of the following annuity riders ensured the owner will receive from an annuity at least the amount paid for the annuity?

Guaranteed lifetime withdrawal

All of the following could own group life insurance EXCEPT?

A group needing low-cost insurance

For variable products, underlying assets must be kept in

A separate account

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

The two types of assignments are ?

Absolute and collateral

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

In an annuitant dies before annuitization occurs, what will the beneficiary recieve?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

Executive bonus

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming ?

Foreign

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

It is only taxable if the cash value exceeds the amount paid for premiums

Which of the following is NOT license in the state of NC?

Life broker

Which life insurance settlement option guarantees payments for the 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?

Life income with period certain

Signing and dating a delivery receipt for a life insurance policy helps establish all of the following time frames EXCEPT

The grace period

An insured purchases a 10-year level term policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate

A situation in which a person can only lose or have no change represents

pure risk

Which type of life insurance policy generates immediate cash value ?

single premium

An insured pays a $100 dollar premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe ?

Aleatory

Which of the following elements is an indexed Universal Life policy is tied to an index?

Cash value

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

Decreases

Which of the following annuity rides ensured investors will receive a set amount of income annually ?

Guaranteed minimum income benefit

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible ?

The insured will need a written consent of the insured

Which of the following is NOT a legitimate use of annuities by businesses ?

Creating a tax shelter

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner

Which of the following types of policies allows for a flexible premium and a variable investment component ?

Variable universal life insurance

Which nonforfeiture option provide coverage for the longest period of time?

Reduced paid-up

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed

Which of the following statements regarding Business Overhead Expense policies is NOT true?

Benefits are usually limited to six months

Which if the following is true regarding written binders ?

Binders prove that the insured has insurance coverage, even though the policy has not been issued yet.

Harry has just received his life insurance policy. In reviewing the title page, Harry was able to ascertain the following information EXCEPT?

His spouse has been assigned the primary beneficiary

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

The insurer may inspect that a moral hazard exists if the policyholder

Is not honest about his health on an application for insurance

In a group life insurance policy, the employer may select all of the following EXCEPT

The beneficiary

Under the extended term nonforfeiture option, the policy cash value is converted to

The same face amount as the whole life policy

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as ?

Utmost good faith

All of the following are requirements of eligibility for social security disability income benefits EXCEPT

Being age 65

Which of the following is true regarding a policy with a face value less than $10,000?

If it is returned during the free look period, the agreement will be void

The main difference between immediate and deferred annuities is

When the income payments begin