Life Insurance Practice Exam 1

The maximum amount that Mr. Metz will be able to convert is?

$2,000

John Livingston owns a 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

An insurable interest must exist when

A life insurance policy is issued

An insurance company will grant an advance from the cash value of a life-insurance policy when the policy owner requests which of the following?

A policy loan

A plan under which the surviving partners of a partnership agree to buy the interest of a deceased partner is known as a:

Buy and Sell Agreement

A prospect's statements made in the application for insurance constitutes a part of which of what clause?

Consideration Clause

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

Endowment at age 65 policy

A policy that allows the kids to convert at a specified age

Family Policy

Tim Watson wants to obtain a Life insurance policy on his employee, Mike Carson, and to name Mike's wife, Deborah Carson, as the beneficiary. Signatures of which of the following would be legally required on the application?

I and II I- Tim Watson II- Mike Carson

Features that may be included in most Term policies include which of the following

I, II, II Convertibility, Renewability, Waiver of Premium Provision

Which of the following statements is true about exercising a Guaranteed Insurability option?

II and IV II- Evidence of insurability is not required IV- The maximum purchase is specified in the contract.

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

May 26v

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

Payor provision

Which of the following statements is true about the premium payment schedule for a Whole Life policy?

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

Which of the following is a Nonforfeiture Option that provides continuing cash-value build-up>

Reduced Paid-Up

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

Representations

Which of the following statements about a typical Suicide clause in a life insurance policy is true?

Suicide is excluded for a specific period of years and covered thereafter

In the formation of a life-insurance contract, the special significance of a Conditional Receipt is that it:

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

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 a hospital five months later. The death proceeds payable under the policy would be :

$0.00

Which of the following contracts requires that a series of benefit payments be made at specified intervals?

Annuity

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

Automatic Premium Loan provision

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

Charge an extra premium

Which of the following policies is generally used to accumulate funds for education?

Endowment

The group of questions below consists of four lettered headings followed by a list of numbered phrases. For each number phrase, select the one heading that is most closely related to it. One heading may be used once, more than once, or not at all. A: Modified Whole Life Policy B: Family Maintenance policy C: Family Income policy D: Family policy A combination of Whole Life and Decreasing Term Insurance

Family Income Policy

A combination of Whole Life and Convertible Term insurance is which several insureds are named

Family Policy

Which of the following statements about a Renewable Term Policy is true?

It is renewable at the option of the insured.

Which of the following statements about Reinstatement provision is true?

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

Which of the following statements is true about a policy assignment?

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

Which of the following is an example of a Limited-Pay Life Policy?

Life paid up at the age of 65

A parent who wishes to have complete control of their sons life insurance policy until he son reaches age 25 can do so through the use of which of the following

Ownership provision

An application 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 application has the right to obtain a copy of the consumer report directly from on insurance company that used the report.

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

The time period covered by the Free Look provision of a life insurance contract starts:

When the insured receives the contract and makes the first premium payment, if needed.

Which of the following policies provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation?

Whole Life

At age 30, Tom Morris 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-Pay Life, and another, Straight Life. Tom wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response?

" 20 pay life will accumulate cash value faster "

The owner of a business is insured under a $100,000 Key Employee Life policy that contains a Double Indemnity clause and a Suicide clause. The business has paid the annual premium of $2,000. Six months after the inception date of the policy, the insured commits suicide. The insurance company's liability for payment is

$2,000

Albert Metz, who has $2,000 of group life insurance, has just terminated his employment Mr. Metz has how many days in which to convert his group coverage to individual coverage?

31 days

Sandra Timms, age 27, is advised by her producer to purchase Life insurance to cover a 20-year-amortized $50,000 business-improvement loan. Which of the following plans would adequately protect Ms. Timms at the minimum premium outlay?

A $50,000 Decreasing Term policy for 20 years

All of the following are a part of a life-insurance policy EXCEPT the:

Conditional receipt

Which of the following individual policy conversions is usually permitted without any evidence of insurability?

Conversion from a Term policy to a whole life

An Annuity is designed to provide which of the following financial features?

I,II The Liquidation of principal and interest. Favorable Tax

Which of the following statements about the Misstatement of Age provision in a life-insurance policy is true?

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

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified 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

Which of the following Settlement options might provide payments that exceed the proceeds of the policy and the interest earned?

Life Annuity

Carl Burk, whose wife is his business partner, buys a Life insurance policy on his wife's life. Because of this third-party ownership, the beneficiary should be the:

Policy Owner

A producer takes an application from a proposed insured without receiving payment of the first premium. The insurance company issues the policy and, when the producer visits the proposed insured to deliver it, she 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.

Margaret May wants to name her husband as the beneficiary of her life policy; however, she wishes to retain all of the rights of ownership. Mrs. May should name her husband as

Revocable Beneficiary

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

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 face amount of the policy less any earned premiums