Life Test #1

Which of the following statements about the assignment of a life insurance policy is (are) true? I. Most insurance companies require that notice of any assignment of a policy must be filed at the home office II. An insurance policy cannot be assigned to any lending institution for the purpose of securing a loan

I. Most insurance companies require that notice of any assignment of a policy must be filed at the home office

If the insured dies by suicide 27 months after buying a policy, which of the following statements is (are) true? I. The beneficiary will receive the full death benefit of the policy II. The beneficiary will receive the full death benefit less any premiums paid

I. The beneficiary will receive the full death benefit of the policy

Which of the following statements about representations and warranties is (are) true? I. A warranty may be true insofar as the applicant is aware but a representation must be absolutely and literally true II. In order to invalidate a contract, a representation must be proved both incorrect and material, whereas a warranty must only be proved incorrect

II. In order to invalidate a contract, a representation must be proved both incorrect and material, whereas a warranty must only be proved incorrect

The Insuring Clause in a life insurance policy states which of the following? I. The location where the application was completed and the date the coverage takes effect II. The promise that the insurance company will pay a stated amount to the beneficiary upon receipt of proof of death of the insured

II. The promise that the insurance company will pay a stated amount to the beneficiary upon receipt of proof of death of the insured

The consideration clause in a life insurance policy states: a) that the insurance is granted in exchange for payment of premium b) that all policies must meet certain standards c) that the Director will consider the policy benefits before approving the policy d) all of the above

a) that the insurance is granted in exchange for payment of premium

Which of the following statements regarding policy loans is NOT true? a) the insured always knows the loan interest rate b) a policy loan must be repaid within 3 years c) a policy will lapse if the loan plus annual interest charges exceed the cash value d) a policy loan decreases the death benefit

b) a policy loan must be repaid within 3 years

A life insurance company may contest a policy during the Contestable Period for which of the following reasons? a) nonpayment of premiums b) material misrepresentation c) change of occupation d) misstatement of age

b) material misrepresentation

After a policy has lapsed, the insured/policy owner generally has 3 years to request a Reinstatement of the policy. Which of the following is NOT true regarding the reinstatement? a) the insurance company will generally require evidence of insurability b) the insurance company must reinstate the policy if the policy owner pays all back premiums c) the insured will be required to pay back premiums with interest d) Generally, policy loans must be repaid

b) the insurance company must reinstate the policy if the policy owner pays all back premiums

Which of the following statements about the Automatic Premium Loan provision in a life insurance policy is true? a) a loan taken under the provision is not interestbearing b) the provision must be elected by the policy owner c) the provision applies only to whole life or limited-pay life policies d) the provision cannot be revoked by the policyowner

b) the provision must be elected by the policy owner

Common policy exclusions include all of the following EXCEPT: a) occupation exclusions for high risk jobs b) war c) exclusions for minor health problems like hay fever d) when traveling as a private pilot in your own airplane

c) exclusions for minor health problems like hay fever

When an insurance company sets their premium rates, they use all of the following EXCEPT: a) expenses b) mortality c) policy loans d) interest earnings

c) policy loans

All of the following statements about life insurance and risk it covers are true EXCEPT: a) Life insurance is a mechanism for pooling and sharing risks b) As the number of separate risks of the same type increases, the amount of loss within a given period becomes more certain c) The probability of an individual insured's death increases each year until becomes a certainty d) Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured

d) Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured.

To receive the death benefit of a life insurance policy, the beneficiary must have insurable interest in another person a) at the birth of the insured b) at the time the last premium is paid c) at the time the insured died d) at the time the policy is issued

d) at the time the policy is issued

If the insured's age was overstated at the time a life insurance policy was purchased and the error was discovered on the death of the insured, the insurance company will a) void the policy b) be prevented from taking any action according to the provisions of the Incontestability clause c) refund the overcharge in premiums to the beneficiary d) provide the additional insurance in the amount that has been purchased by the additional premium

d) provide the additional insurance in the amount that has been purchased by the additional premium

What rights does the insured have under the Free Look Provision? a) the insured has 30 days to investigate the insurance company b) the insured is given a policy free and must pay after 10 days c) the insured has 30 days to look at proposals before he must decide on a policy d) the insured has 10 days to look over his policy or return it for a full refund

d) the insured has 10 days to look over his policy or return it for a full refund