Life insurance practice exam 1

Cheryl brown, 827, is advised by her producer to purchase life insurance to cover a 20 year amateur rised 50000 business improvement loan. Which plan would adequately protect Mrs Brown at the minimum premium outlet?

A $50,000 decreasing term policy for 20 years

And insurable interest must exist when?

A life insurance policy is issued

Which contract/policy requires a series of benefit payments be made at specified intervals?

Annuity

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

Charge an extra premium

A prospect statements made in the application for insurance, constitute a part of which of the following?

Consideration clause

Cash surrender is available on an annuity in which of the following situations

During the accumulation.

A husband and wife are going to attend and decide to select the joint life payout option upon amateurization. They will receive monthly annuity payments from the insured until

Either the husband or wife dies because they didn't select joint survivorship

In the information of a life insurance contract, the special significance of a conditional receipt is that it

Is intended to provide coverage on a date earlier than the date of the issuance of the policy

Which statement about a renewable term policy is true?

It is renewable at the option of the insured without having to prove insurability

Which statement about the reinstatement provision is true

It requires the policyholder to pay, with interest, all the premiums that are in arrears in order for the policy to be reinstated

Which statement would a typical suicide clause in a life insurance policy is true

Suicide is excluded for a specific period of years and covered there after

Which of the following is true of the duties of the National Association of Securities Dealers also known as NASD

They are responsible for making sure that their members follow federal laws and rules

Statements made by an applicant for a life insurance policy that are supposed to be true are referred to as

Representations

The provision in a life insurance policy that provides protection against unintentional policy lapses is known as the

Automatic premium loan provision

Which individual policy conversion is usually permitted without any evidence of insurability?

Conversion from a term policy to a whole life policy

Which policy is generally used to accumulate funds for education?

Endowment

A single premium used to buy a whole life policy will pay up the policy

For the life of the policy

Fixed life insurance products are guaranteed by the insurance companies

General account

If the beneficiaries main objective for the death benefit proceeds is a state conservation, they would most likely select which settlement option upon death of the insured

Interest

Seth brown, whose wife is a business partner, find a life insurance policy on his wife's life. Because of the third party ownership, the beneficiary should be the

Policyholder

Which statement is true about the premium payment schedule for a whole life policy?

Premiums are payable throughout the insured's lifetime, the coverage continues until the insured's death

Which of the following is a non forfeiture option that provides continuing cash-value build up

Reduce paid-up

Which type of insurance policy would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources

Term life

An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation except

The applicant has the right to obtain a copy of the consumer report directly from an insurance company that used to report. They are not required to give a copy

A producer takes an application from a proposed insured without receiving payment for the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, the producer realizes that the health of the applicant has deteriorated significantly since the application was taken. The producer should

Refuse to deliver the policy or to accept any premium offered

A 54 year old client surrenders his 403 B tsa for cash. His tax implications would be

The full amount is taxed as ordinary income plus a 10% penalty on the full amount distributed

The time period covered by the 10 day free look provision of a life insurance contract starts

When the insured received the contract and make the first premium payment, if needed

A client pays $4,000 in premiums on his 50000 whole life policy that has a cash value of 5000. If he takes cash surrender, his tax implication will be

1000 ordinary income

An insured died during the grace period of her life insurance policy and had not paid the required annual premium. The insurance company is obligated to pay which of the following to the beneficiary

The the face amount of the policy less any earned premiums

Dividend projections may be included in a proposal for life insurance when which of the following is true?

There is a clear statement that the payment of future dividends is not guaranteed

Which of the following is true of the duties of the Securities and Exchange Commission also known as the SEC

They are responsible for enforcing federal securities laws

Which of the following statements is true about a policy assignment

It transfers the ownership rights under the policy to the extent expressed in the assignment form

All of the following are true about universal life except

The death benefit paid to a beneficiary is taxable as ordinary income. Not true because it's just like any other life insurance policy

All of the following are part of a life insurance policy accept

Conditional receipt

Which settlement option might provide payments that exceed the proceeds of the policy and the interest earned?

Life annuity

Which of the following is an example of a limited pay life policy

Life paid up at 65

Which policy provides the greatest amount of protection for an insurance premium dollar as well as some cash accumulation

Whole Life policy

At age 30, Clark Peterson wishes to purchase a whole life policy. His producer explains that he can pay for the policy in several ways. One method is called 20 year pay life, and another, straight life. Clark wishes to know which plan will accumulate cash value after fastest rate in the early years of the policy. Which of the following would be the producers most appropriate response

20 day life will accumulate cash the fastest

A client with a 300000 modified endowment contract paid in 70000 in premiums his cash value is 900000. If he takes cash surrender what percentage of the distribution is taxed as ordinary income?

30% : he received 100,000 paid in 70,000 at least 30,000 which equals 30%

A parent who wishes to have complete control of a son's life insurance policy until the Sun reaches age 25 can do so through the use of?

Ownership provision

And insurance prospect wants to purchase a policy that will accumulate the largest amount of cash by the age of 65. Which policy would be most likely to satisfy the prospects needs?

Endowment at age 65

Which statement about the misstatement of age provision in a life insurance policy is true?

If the insured's age has been miss understated, it provides that the death benefit smaller than the face amount of the policy will be payable

The life insurance policy clause that prevent an insurance company from denying a claim payment of a death claim after a specific period of time is known as the

Incontestability clause

When someone other than the insured is the owner of a life insurance policy, the owner may do all of the following without the insured's consent except

Increase the amount of insurance

On May 8th, a prospect filled out an application for a life insurance policy but paid no premium. The insurance company approve the application on May 14th and issue the policy on May 15th. The producer delivered the policy on May 26th and collected the first premium. The coverage became effective on

May 26th

The owner of a business is insured under 100000 key employee life policy that contains a double indemnity clause and a suicide clause. The business has paid the annual premium of $2,000. The six months after the inception date of the policy, the insured commit suicide. The insurance company's liability for payment is

Only the $2,000 that was paid into the policy because he committed suicide inside of two years

In a policy insuring the life of a child, which of the following allows the premium to be waived in the event of the death or disability of the person responsible for the premium payments?

Payer provision/ Death of payor Rider / payor death benefit rider / payor benefit clause

An applicant for a life insurance policy is a student pilot, which of the following is true?

They would have to pay more than a standard risk for their coverage

A $10,000 life insurance policy with a triple indemnity clause has been in force for three years. The insured is injured in a train wreck and dies in the hospital 5 months later. The proceeds payable under the policy would be

$10,000 for triple indemnity death must occur within 90 days

Mr. Peabody only say 30 pay life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of?

100