life insurance Q & A

Which of the following best describes annually renewable term insurance

it is level term insurance

universal life

an insurance component in the form of annually renewable term, two death benefit options , option a level death benefit, option B increasing death benefit, can make partial surrender/cash withdrawal

an individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits writer which of the following is true regarding taxation of the accelerated benefits

a portion of the benefit up to a limit is tax free the rest is taxable income

the term illustration in life insurance policy refers to

a presentation of nonguaranteed elements of a policy

which of the following is not typically excluded from life policy's

death due to plane crash for a fare paying passenger

Which of the following describes attachments made to policies that either add or modify coverage

riders

Which of the following applicants would not qualify for a Keogh plan

someone who worked 400 hours per year

The interest earned on policy dividends is

taxable

Term life general characteristics

pure protection, last for specific term, no cash value

if an agent suspects that insurance fraud is being committed within how many days must the agent notify the insurance fraud unit of the Department of Insurance

30 days

The insured is also the policy owner of a whole life policy what age must the insured attain in order to receive the policy's face amount

100

Which of the following is the required number of participants in a contributary group plan

75%

Who is a third party owner

a policy owner who is not the insured

which of the following is true regarding the annuity period

It may last for the lifetime of the annuitant

An insured committed suicide one year after his life insurance policy was issued.

The insurer will refund the premiums paid

What is the name of the insured who enters in a viatical settlement

Viator

What is the benefit of choosing extended term as a nonforfeiture option

it has the highest amount of insurance protection

A Corporation is the owner and beneficiary of the key person policy. If the Corporation collects the policy benefit, then

the benefit is received tax free

Nonforfeiture values guarantee which of the following for the policy owner

the cash value will not be lost

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policy owner

third party ownership

An insured owns a $50,000 whole life policy. At age 47 the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would the face amount of the new term policy be

$50,000

All of the following are nonforfeiture's

cash surrender, extended term, reduced paid up

which of the following would be required to be licensed as an insurance producer

a salaried employee who advertises and solicits insurance

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount

equal to the original policy for as long as the cash values will purchase

Which of the following statements is true concerning the accidental death rider

it will pay double or triple the face amount

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

joint and survivor

Veritable whole life insurance is based on what type of premium

level fixed

in insurance, an offer is usually made when

an applicant submits an application to the insurer

The minimum interest rate on an equity index annuity is often based on

an index like standard and poor's 500

To legally transact insurance in this state an insurer must obtain which of the following

certificate of authority

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

executive bonus

If taken as a lump sum, life insurance proceeds to beneficiaries are passed

free of federal income taxation

Which of the following is not true regarding a non qualified retirement plan

it needs IRS approval

Which of the following settlement options in life insurance is known as straight life

life income

What are the licensing requirements for someone who sells verbal universal life insurance

life insurance and securities

Which of the following is true about nonforfeiture values

they are required by state law to be included in the policy

An insured under a life insurance policy has been diagnosed with a terminal illness and has six months to live the insured knows that his financial state will worsen even more with the upcoming medical expenses. What option could the insured utilized

viatical settlement

combination plans

joint life, premium is you based on the joint average age of the insured death benefit upon the first death only, survival ship life premium is based on the joint average age of the insured death benefit upon the last death.

If the policy owner, the insured , and the beneficiary under a life insurance policy are three different people, who has the ownership rights

policy owner

Single premium whole life

premiums paid in one lump sum; Coverage continues to age 100

A domestic insurer issuing variable contracts must establish one or more

separate accounts

The annuity owner dies while the annuity is still in the accumulation stage which of the following is true

the beneficiary will receive the greater of the money paid into the annuity or the cash value.

Which of the following best defines target premium in a universal life policy

the recommended amount to keep the policy in force throughout its lifetime

Which of the following is true for both equity index annuities and fixed annuities

they have a guaranteed minimum interest rate

A man purchased a $90,000 annuity with a single premium, and begin receiving payments two months after that. What type of annuity is it

immediate

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years period what type of annuity products are they likely to use to provide these benefits

immediate annuity

Annually renewable term policies provide a level death benefit for a premium that

increases annually

Which of the following policy components contains the company's promise to pay

insuring clause

These are true regarding equity index annuities

they are less risky than veritable annuities, the insurer company keeps a percentage of the returns, they have guaranteed minimum interest rates.

The main difference between immediate and deferred annuities is

when the income payments begin

All of the following are dividend options

accumulated at interest, reduction of premium, paid up additions

contracts that are prepared by one party and submitted to the other party on a take it or leave it basis are classified as

contracts of adhesion

which of the following is used to compare the cost of one life insurance policy against another in order to guide perspective purchasers to policy that are competitively priced

cost comparison method

an insurance professional advises a client regarding the benefit of her life insurance policy in exchange for a fee which of the following terms best describe this type of insurance professional

counselor

what happens when a policy is surrendered for its cash value

coverage ends and the policy cannot be reinstated

decreasing term

coverage gradually decreases at predetermined times; best used when the need for protection declines from year to year

All of the following are true regarding guaranteed insurable rider

it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates and advance. The insured may purchase additional coverage AT and attained age, the insured may purchase additional insurance up to the amount specified in the base policy

what is the benefit of choosing extended term as a nonforfeiture option

it has the highest amount of insurance protection

a married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured which policy is that

joint life policy

The premium of a survivorship life policy compared with that of a joint life policy would be

lower

If a life insurance policy develops cash value faster than A7 pay whole life contract, it becomes a

modified endowment contract

under the fair credit reporting act individuals rejected for insurance due to information contained in a consumer report

must be informed of the source of the report

Traditional IRA contributions are tax deductible based on which of the following

owners income

Which nonforfeiture option provides coverage for the longest period of time

reduced paid up

A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy she also wishes to retain all the rights an of ownership. The policy owner should have her husband named as the

revocable beneficiary

An employee has group life insurance through her employer after five years, she decides to leave the company and work independently. How can she obtain an individual policy

she can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

Which of the following riders Is often used in business life insurance policy's when the policy owner needs to change the insured under the policy

substitute insured writer

all of the following are unfair claims settlement practices except

suggesting negotiations in settling the claim

A producer is helping a married couple determined the financial needs of their children in the event one or both should die prematurely this is a personal use of life insurance known as

survivor protection

All of the following would be different between qualified and non qualified retirement plans except

taxation an accumulation

Which of the following when attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide additional amount of temporary insurance on the insured or allows amount of temporary insurance to cover other family members

term Ryder

Which of the following when attached to a permanent life insurance policy allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured or allows amounts of temporary insurance to cover other family members

term rider

which of the following information will be stated in the consideration clause of life insurance policy

the amount of premium payment

All of the following are true statements regarding the accumulation at interest rate option

the annual dividend is writ aned by the company, the interest is credited at a rate specified by the policy, the policy Holder has the right to withdraw the accumulations at anytime

If the policy has an automatic premium loan provision what happens if the insured dies before the loan is paid back

the balance of the loan will be taken out of the death benefit

Which of the following statements about group life is correct

the cost of coverage is based on the ratio of men and women in the group

Which of the following describes the tax advantage of a qualified retirement plan

the earnings in the plan accumulate tax deferred

All of the following statements concerning an employer sponsored non qualified retirement plan are true except

the employer can receive a current tax deduction for any contributions made to the plan

What is the advantage of restating a policy instead of applying for a new one

the original age is used for premium determination

All of the following are generally requirements of a qualified plan except

the plan must provide an offset for Social Security benefits

types of annuities

fixed annuities guaranteed fixed payment amount premiums in general account, variable annuities payment not guaranteed premiums in separate account an invested in stocks and bonds, indexed annuities interest rate tide to an indexed earn higher rate than fixed annuities not as risky as veritable annuities or mutual funds

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection

greatest

Equity index annuities

seek higher returns

Which of the following would help prevent a universal life policy from lapsing

target premium

annually renewable term

renews each year without proof of insurability, premiums increase due to attained age

An insured decides to surrender his $100,000 whole life policy the premiums made 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

$3000

an individual covered under a group life insurance policy may convert the policy to any of the following except

15 year level term

The minimum number of credits required for partially insured status for Social Security disability benefits is

6 credits

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement age 65. What would be the right policy for the client

Limited pay whole life

A straight life policy has what type of premium

a level annual premium for the life of the insured

Annuities phase

accumulation , pay in , payments made into the annuity , annuitization , payout , payments made to the annuitant from the annuity

And insured miss states her age at the time of life insurance application is taken. The misstatement may result in

adjustment in the amount of death benefit

The provision which states that both the policy an A copy of the application form the contract between the policy owner and the insurer is called the

entire contract

Which non forfeiture option has the highest amount of insurance protection

extended term

when possible what should insurers strive to eliminate from illustrations

footnotes and caveats

What would be an advantage to naming a contingent beneficiary in a life insurance policy

it determines who receives policy benefits if the primary beneficiary is deceased

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up . What kind of policy is it

limited pay life

What is the term for how frequently a policy owner is required to pay the policy premium

mode

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

pay in period.

general characteristics of whole life

permanent protection, guaranteed elements , level premium, cash value and other living benefits

Which of the following is not one of the three basic types of coverage that are available, based on how the face amount changes during the policy

renewable

an agent receives an emergency cease and assist order for chronically miss trepid sent aiding his insurance policy's the agent knows that he did not commit the violations stated in the emergency cease and assist order he wants to contest the charges in a court hearing which of the following is true

the hearing must be held within 10 days of receiving a request unless both parties agreed to a later date

All of the following are true of an annuity

the owner pays the premiums on the annuity, the owner has the right to name the beneficiary, the owner is the party who may surrender the annuity.

Which of the following determines the cash value of a variable life policy

the performance of the policy portfolio

Which of the following best describes what the annuity. Is

the period of time during which accumulated money is converted into income payments

Which of the following statements is correct regarding a whole life policy

the policy owner is entitled to policy loans

Which of the following statements is true concerning irrevocable beneficiaries

they can be changed only with the written consent of the beneficiary

All of the following statements about equity index annuities are true

they have a guaranteed minimum interest rate, the interest rate is tide to an index such as the standard and poor's 500, they invest on a more aggressive basis aiming for higher returns

Which of the following types of policies allow the policy owner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount

universal life

Which policy would have an IRS required corridor or gap between the cash value and the death benefit

universal life option a

which of the following policies would have an IRS required quarter or gap between the cash value and the death benefit

universal life option a

Winning insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all the premiums paid. Which rider is attached to the policy

return of premium

all of the following are requirements for life insurance illustrations

they must do it for differentiate between guaranteed an projected amounts they may also be used as approved they must identified nonguaranteed values

what is the main purpose of the regulation on life insurance policy illustrations

to help customer make educated decision in buying life insurance

All of the following are true regarding a decreasing term policy

the face amount steadily declines throughout the duration of the contract, the death benefit is zero at the end of the policy term, the contract pays only in the event of death during the term and there is no cash value.

an employee quits his job on May 15th and doesn't convert to his group life policy to an individual policy for two weeks he dies in a freak accident on June 1st which of the following statements best describes what will happen

the insurer will pay the full benefit from the group policy to the beneficiary

Which determines the cash value of a variable life policy

the performance of the policy portfolio

Which of the following is a feature of a veritable annuity

benefit payment amounts are not guaranteed

What required provision protects against unintentional lapse of policy

grace period

The death benefit under the universal life be

gradually increases each year by the amount that the cash value increases

which members of a Corporation or partnership are required to obtain an individual insurance agents license in order for the Association to be licensed

at least one officer or partner an any person acting as an agent

An employee quits his job an converts his group policy to an individual policy Will be based on his

attained age

A policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision

automatic premium loan

which of the following best describes fixed. Settlement option

both the principle and the interest will be liquidated over a selected period of time

All of the following statements are true regarding tax qualified annuities except

employer contributions are not tax deductible

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 the 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

If a life policy allows the policy owner to make periodic additions to the face amount of standards rates, without proving insurability, the pool city includes a

guaranteed insurability rider

To become a Texas insurance agent, an individual must

have passed a licensing exam within the 12 months before applying

which of the following occupations would not directly help to qualify someone for the office of commissioner of insurance

insurance agent

which one of the following is a true statement about a temporary license issued in the state

it can only be issued once in any six month.

what is the purpose of a conditional receipt

it is intended to provide coverage on a date prior to the policy issuing

What is the purpose of establishing the target premium for a universal life policy

to keep the policy in force

Social Security was created to provide all of the following benefits except

unemployment income

In a survivorship life policy, when does the insurer pay the death benefit

upon the last death

characteristics of flexible premium

types of whole life insurance, flexibel premium

What license or licenses are required to sell variable annuities

both a life insurance and a securities license

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible

collateral assignment

An insured and his wife are both involved in a head on collision. The husband dies instantly, and the wife dies 15 days later period the company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision

common disaster

An insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

consideration

Veritable life

fixed premium, minimum death benefit, cash value and the actual amount of death benefit are not guaranteed , assets in separate accounts, agents must be duly licensed in insurance and securities

Which of the following is true regarding the accumulation. Of an annuity

it is a period during which the payments into the annuity grow tax deferred

These statements are true about a straight life policy

it usually develops cash value by the end of the third policy year, it has the lowest annual premium of the three types of whole life policies, the face value of the policy is paid to the insured at age 100.

A policy will pay the death benefit if the insured dies during the 20 year premium paying. An nothing if death occurs after the 20 year. What type of policy is this

level term

A man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that his policy

required a premium increase each renewal

According to the entire contract provision, what document must be made part of the insurance policy

copy of the original application

Which type of life insurance policy generates immediate cash value

single premium

For variable product's, underlying assets must be kept in

a separate account

The two types of assignments are

absolute an collateral

annuities parties

annuitant insured must be a natural person annuity issued an annuity and's life, beneficiarii will receive any amount contributed to the annuity if the annuitant dies during accumulation., owner has all rights to the policy can be Corporation or trust

The policy owner of a universal life policy may skip paying the premium and the policy will not lapse as long as

the policy contains sufficient cash value to cover the cost of insurance

A universal life insurance policy is best described as a

annually renewable term policy with a cash value account

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after one year since the annuitant was purchased what type of annuity is it

deferred

An insured purchased a life insurance policy. The agent told him that depending upon the companies investments an expense factors, the cash values could change from those shown in the policy at issue time the policy is a

interest sensitive whole life

Which of the following statements are true about a policy assignment

it transfers rights of ownership from the owner to another person.

Which option for universal life allows the beneficiarii to collect both the death benefit and the cash value upon the death of the insured

option B

limited payment whole life

premiums paid until a certain time; coverage in effect to age 100

Which of the following policies would be classified as a traditional level premium contract

straight life

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

term

What are true about beneficiary designations

the beneficiary maybe a natural person, the policy does not have to have a beneficiary named in order to be valid, trust can be the beneficiaries

The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the insureds death, the proceeds of the policy will go to

the insured a state

The validity of the 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

two years

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war while serving in the military

war or military service

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be made to the beneficiary

a full death benefit

features of term policies

renewable renew the policy without evidence of insurability, convertible right to convert a term policy to a permanent policy without evidence of insurability

Who can make a fully deductible contribution to a Traditional IRA

an individual not covered by an employer sponsored plan who has earned income

Who may contribute to a Keogh plan

self employed plumber

Which of the following is true regarding the premium in term policies

the premium is level

An insured pays an annual premium to his insurer . In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

consideration

An individual has just borrowed $10,000 from his bank on a 5 year installment loan requiring monthly payments. What type of insurance policy would be best suited to this situation

decreasing term

Which of the following components must a life insurance policy have to allow policy loans

cash value

ordinary whole life

basic policy, level death benefit, insured pays premium for life or until age 100

A policy owner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all the rights of ownership. The policy owner should have her husband named as the

revocable beneficiary

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, an matures at the insureds age 100 is called

single premium whole life

level premium term

level death benefit an level premium

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdraw and the insurer charges a fee. What type of policy does the insured most likely have

universal life

Which of the following features of the indexed whole life policy is not fixed

cash value growth

Which of the following is true about the mandatory free look in a life insurance policy

it commences when the policy is delivered

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after one year since the annuity was purchased. What type of annuity is it

deferred

The death benefit in a variable universal life policy

depends on the performance of a separate account

The ownership provision entitles the policy owner to do all of the following

designate a beneficiary, receive a policy loan, assign the policy