Life Insurance Test Pt. 4
How long must a producer maintain customer record for an insurance transaction?
2 years
Which type of policy can group term life insurance normally be converted to?
An individual permanent life insurance policy
An individual who purchases a modified life insurance policy expects
An improvement in future income
Which of the following is considered to be an example of unfair restraint of competition?
Coercion
How may an insurance company classify an accidental death benefit on a life policy?
As an optional policy rider
In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?
Automatic premium loan
The main purpose of an annuity is to
Create a stream of income
Which of the following disability buy-sell agreements is best suited for business with a limited number of partners?
Cross-purchase agreement
If a life insurance applicant is shown future premiums are to be paid out of non-guaranteed values, the illustration used in the sales presentation MUST
Disclose that premium payments may need to be resumed depending on actual results
Which statement concerning an adjustable life insurance policy is FALSE?
Evidence of insurability is required when there is a change in premium
When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?
Give notice, explain, and allow opting out
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?
Incontestable Clause
When premiums are determined, one factor would be the expenses of the
Insurer
In what way are insurance policies aid to be aleatory?
Involves the potential for the unequal exchange of value
When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?
Irrevocable beneficiary
What must be disclosed when a producer advertises a life insurance policy?
Name of the actual Insurer
A producer's failure to provide title and true nature of a policy upon solicitation is an example of
Misrepresentation
Which of these is NOT an Unfair Claims Settlement Practice?
Offering to settle a claim by arbitration
All of the statements correctly describe an aleatory contract EXCEPT
Only one party makes any kind of legally enforceable offer
Which statement regarding an adjustable life insurance policy is NOT true?
Policy loans are not permitted
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
How are level policies able to provide level premiums?
Premiums are averaged over the term of the policy
The automatic premium loan provision can be accurately described as
Provision that provides a policy loan to pay any premiums by the end of the grace period
The automatic premium loan provision can be accurately described as a
Provision that provides a policy loan to pay any premiums by the end of the grace period
Which of the following types of risk is insurable?
Pure
What type of risk involves the potential for loss with no possibility for gain
Pure Risk
During an annuity's liquidation phase, the annuitant normally
Receives benefit payments at regular intervals
A life insurance policy's waiver of premium rider has the ability to
Relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
Which of the following would most likely purchase an immediate annuity?
Retiree having a lump sum to invest
What kind of arrangement gives the policyowner the right to change the beneficiary?
Revocable designation
What happens to the cash value of a market value adjusted annuity if it's surrendered prior to the end of the stated guarantee period?
Subject to market value adjustment
Which of these annuity contract features is meant to discourage withdrawals and exchanges?
Surrender Charges
A hold-harmless clause is an example of risk
Tansfer
The interest paid during an annuity's payout period is considered
Taxable as ordinary income
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for
Ten year term insurance for a person aged 55
Which statement regarding the joint and survivor life insurance settlement option is NOT true?
The amount of each installment is larger than the single life income
A business becoming incorporated is an example of risk ____
Transfer
Which reinsurance contract between two insurers involves an automatic sharing of the risk assumed?
Treaty reinsurance
Which of the following statements about universal life insurance is NOT true?
Universal life insurance normally has a minimum guaranteed cash value for duration of the policy
How long does protection normally extend to under a limited pay whole life policy?
Until age 100