LIFE TEST REVIEW

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

Joint and survivor.

All of the following statements about equity index annuities are correct EXCEPT

The annuitant receives a fixed amount of return.

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

The Commissioner has scheduled a hearing for a producer who is implicated in engaging in an unfair method of competition. The notice of hearing must be delivered to the producer NO later than how many days prior to the hearing?

10 days

How many hours of continuing education must be completed on the subject of ethics each license renewal period?

3 hours

Which of the following is the closest term to an authorized insurer?

Admitted

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

Not subject to income taxation by the Federal Government.

All of the following are true about variable products EXCEPT

The premiums are invested in the insurer's general account.

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A policy summary

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

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

Decreasing term

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor.

Equity Indexed Annuities

Seek higher returns

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement options.

Which of the following is true if an insurer bases a life insurance policy loan interest rate on a published monthly average?

The average must not exceed the monthly average of the month ending 2 months before the date the rate is determined.

Which of the following statements would best describe the difference between viatical settlements and accelerated death benefits?

Viaticals are funded by a third party, and Accelerated Death benefits are provided by the insurer that issued the original policy.

in life insurance policies, cash value increases

Grow tax deferred.

The policyowner 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.

What is the purpose of settlement options?

They determine how death proceeds will be paid.

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?

100% participation of members is required in noncontributory plans.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

A policyowner 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

All of the following are true regarding a decreasing term policy EXCEPT

Single premium whole life.

Which is TRUE about the cash surrender nonforfeiture option?

Funds exceeding the premium paid are taxable as ordinary income.

What is the required annuity training for producers in this state?

One-time 4-credit training course

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

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

Refund the premiums paid.

Which two terms are associated directly with the way an annuity is funded?

Required a premium increase each renewal.

Which of the following statements about a suicide clause in a life insurance policy is TRUE?

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

A producer is helping a married couple determine 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

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy.

Which of the following is a permissible adjustable policy loan interest rate taken out in connection with a life insurance policy?

The interest rate is no greater than the rate used to compute the cash surrender value of the policy, plus 1% per year.

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate.

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract.

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

Which of the following, when attached to a permanent life insurance policy, allows the policyowner 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 is NOT true regarding the accumulation period of an annuity?

it would not occur in a deferred annuity.

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

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

Limited pay whole life

The paid-up addition option uses the dividend

To purchase a smaller amount of the same type of insurance as the original policy.

When a producer uses an illustration while selling a life insurance policy, which of the following terms is the producer forbidden to use?

Vanishing premium

The term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy.

it is suspected that a producer is consistently violating insurance laws. Which of the following entities is responsible for making sure that the producer stops committing these violations?

Commissioner

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider.

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a

Convertible Term Policy.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant

With the policy.

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Who can make a fully deductible contribution to a traditional IRA?

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

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 life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed period

nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

An applicant who receives a preferred risk classification qualifies for

Lower premiums than a person who receives a standard risk.

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Paul is a producer in Kansas and wants to become a producer in Iowa. The Department will waive certain examination requirements, provided that Kansas would waive these same requirements if an Iowa producer sought licensure in Kansas. What term is used to describe this phenomenon?

Reciprocity

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE?

The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy.