Life Insurance Practice Exam

Statements in the application for insurance that are believed to be true to the best of applicant's knowledge are called?

Representations.

An annuity that is purchased with a lump-sum payment, and that begins income payments within one year is a?

Single premium immediate annuity.

What is the risk classification for those who are insurable, but have a higher than average risk?

Substandard.

Underwriting is the process of?

Determining the company's risk regarding a proposed insured.

For an insurance contract, the principle of utmost good faith means?

Each party relies upon the truthfulness of the other.

If an annuitant dies during the accumulation period, what will the beneficiary receive?

Either the cash value or the premiums paid, whichever is greater.

Money borrowed from the policy's cash value is?

Not taxable.

Which of the following annuity products requires an agent to hold a securities license?

Variable Annuities.

All other factors being equal, which of the following types of policies will accumulate cash value at the fastest rate?

20-pay life.

At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty?

59

A life settlement option that pays out the death benefit incrementally, in a specified amount until all of the proceeds are exhausted, is called?

Fixed-amount installments.

Which of the following allows an insurance company to deny coverage if the insured's death occurs in a war?

Policy exclusions.

What does the payor benefit rider protect?

Premium payments for a juvenile policy.

Which of the following is Not a nonforfeiture option in whole life policies?

Accumulation at Interest.

Which type of policy allows the insured to change the amount of the death benefit, the amount of premium, or the type of coverage as their needs change?

Adjustable life.

If a misstatement of age is discovered during the processing of a life insurance claim, what will the insurer do?

Adjusts the death benefit based on the premiums that were paid.

The legal transfer of all or part of a policyowner rights, title or interest is called an (a)?

Assignment.

Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the surviving partner to use the death benefit to purchase the deceased's business interests?

Buy-sell agreement.

What do employees covered under a group contract receive?

Certificate of insurance.

The receipt given to a life insurance applicant when the application is completed and the initial premium is received is called a(n)?

Conditional Receipt

The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called?

Continuous premium (straight) life.

The policy and a copy of the application, along with any riders and amendments, is called the?

Entire contract.

An annuity in which investment growth is dependent on the performance of an index such as the Standard and Poor's 500 is called a(n)?

Equity Indexed Annuity.

Each of the following is typical characteristic of group life insurance Except?

Evidence of insurability is usually required.

To prevent people from profiting from a loss, insurers must be certain?

Insurable interest exists.

the transfer of a possible financial loss to another party refers to?

Insurance.

An insurance agent represents the?

Insurer.

A whole life product that covers two lives and provides for payment of the death benefit on the death of the first insured is called?

Joint life.

Which type of annuity settlement stops when the annuitant dies?

Life income annuity.

At age 25, an individual purchased a decreasing term policy. What happens to the coverage and the premiums as the insured gets older?

The coverage decreases but the premiums stay the same.

Which statement is Incorrect concerning policy dividends?

The insurer may guarantee dividends.

if the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered?

The portion that exceeds the premiums paid is taxable.

The "pay in" phase of the annuity is known as what period?

Accumulation period.

How long does an employee have to convert group policy coverage to an individual policy without evidence of insurability?

31 days.

Which of the following retirement plans is a special tax favored plan for non profit, charitable, educational or religious groups?

403(b) Tax-sheltered Annuity (TSAs).

An insurer mails an insurance policy to new policyowner. When the insurer relinquishes control of the policy, the policy is considered?

Delivered.

Which of the following types of annuities would be best suited for a retired couple who are seeking income for as long as either lives?

Joint and survivor.

Which settlement option guarantees an income for 2 or more recipients for as long as they live?

Joint and survivor.

Which of the following indicates the person upon whose life the annuity income amount is determined?

Annuitant

Betty is the only beneficiary named on her husband Bob's policy which has a Common Disaster provision. They are in a car wreck, and Bob dies instantly. Betty lives for 29 days. Who will receive the death benefit?

Bob's estate.

What type of permanent insurance allows the policyowner to pay for a policy in a specified period of time, and the policyowner does not have to make any more premium payments for the life of the policy?

Limited payment.

The MIB is a nonprofit trade association that maintains?

Medical information on applicants for life and health insurance.

What is the purpose of the grace period in life insurance policies?

To protect the policyowner against an unintentional lapse of the policy.

An agent delivers a policy to an insured, and 9 days later the insured returns the policy and wants a complete refund. What provision covers this circumstance?

Free look.

The premium payment mode can be best described as the ?

Frequency with which the policy premium will be paid.

Any insurer who is Not approved to do business in this state is considered?

Nonadmitted.

This part of the application provides information about an applicant's financial condition and character, as well as the purpose of sale and how long the agent has known the applicant:?

Agent's Report.

London Mutual Life is an insurer incorporated in England, and is transacting business in this state. London Mutual would be considered what type of insurer?

An alien insurer.

A life insurance death benefit paid in a lump sum to a beneficiary is?

Not subject to any taxes.

An annuity is considered fixed when it does all of the following Except?

Provides the annuitant with an interest rate that is the lesser of the guaranteed or current rate.