Matt's Primerica Test
A copy of the original application for insurance.
According to the Entire Contract provision, a policy must contain
application
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information?
A STOLI policy
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
return of premium rider
Because of financial obligations, John felt that he needed more insurance than the insurer was willing to issue. John's insurance producer told him that he could maximize the death benefit without increasing the face amount by the use of a(n)
The prospective insured and the insurer.
In accordance with the Code of Ethics, agents must provide a completed application to
Handling insurer funds in a trust capacity.
In insurance transactions, fiduciary responsibility means
general lines
The agent in charge of an agency must hold which of the following licenses?
Survivor protection, estate creation and conservation, cash accumulation and liquidity
What are the personal uses of life insurance?
The original age is used for premium determination
What is the advantage of reinstating a policy instead of applying for a new one?
The insurer is bound by the agent's acts.
When an insurer appoints an agent,
universal life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
lower
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
common disaster
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?
The premium will increase because the insured will be 5 years older than when the policy was originally purchased.
An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years
Misinterpretation
If during a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant, the producer has committed
It is never legal to limit coverage based on marital status.
In which of the following situations is it legal to limit coverage based on marital status?
To purchase a smaller amount of the same type of insurance as the original policy.
The paid-up addition option uses the dividend
The annuitant must be a natural person.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
A nonqualified annuity plan.
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is
The policyowner is entitled to policy loans.
Which of the following statements is correct regarding a whole life policy?
Backdating policies to secure a lower premium for the insured
Which of the following would NOT be considered a misrepresentation on the part of the insurer?
a) Beneficiary's age.
All of the following information about a customer must be used in determining annuity suitability EXCEPT a) Beneficiary's age. b) Tax status. c) Financial experience. d) Annual income.
50%
In the state of Florida, it is illegal for a licensee's commissions from controlled business to exceed what percentage of the total in a given year?
b) Funding against general company financial loss.
The following are legitimate uses of insurance in a business setting EXCEPT a) Funding business continuation agreements. b) Funding against general company financial loss. c) Compensating executives. d) Funding against financial loss caused by the death of a key employee.
It can protect the policy proceeds from creditors of the beneficiary.
Which of the following is true regarding the spendthrift clause in life insurance policies?
increasing term
The type of term insurance that provides increasing death benefits as the insured ages is called
It may last for the lifetime of the annuitant.
Which of the following is true regarding the annuity period?
premium receipt
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
a) Dividend amounts are guaranteed in the policy.
All of the following statements concerning dividends are true EXCEPT a) Dividend amounts are guaranteed in the policy. b) Lower insurance company costs generate higher dividends. c) They stem from favorable underwriting experience. d) Favorable investment results generate higher dividends. Dividends cannot be guaranteed.
johns age at death
When Mary's husband John died, she was the beneficiary of his $100,000 life insurance policy. She decided to assure that she would have income for life, so she chose the life income settlement option. The amount of her payments will be determined by using all of the following, EXCEPT
Pay the policy proceeds only if it would have issued the policy.
A prospective insured receives a conditional receipt and dies before the policy is issued. The company will
c) Interest only
All of the following are Nonforfeiture options EXCEPT a) Extended term b) Reduced paid-up c) Interest only d) Cash surrender
Obtain a list of all life insurance policies that will be replaced
During replacement of life insurance, a replacing insurer must do which of the following?
separate account
In variable whole life policies, where are the policy premiums allocated?
Putting the client's best interest before their own
In what way can an agent demonstrate a high standard of ethics?
That the cash value will not be lost
Nonforfeiture values guarantee which of the following for the policyowner?
one year term option
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
Foreign
When doing business in this state an insurance company that is formed under the laws of another state is known as which type of insurer?
Fraternal benefit society
Which of the following entities is not an insurer, but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?
Insurance Guaranty Association
Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?
third party ownership
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 policyowner?
A person may hold several appointments at one time.
Which of the following is true regarding the agent's appointments?
the policy will not be affected
An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history 1 year later. What will probably happen?
grace period
What provision in an insurance policy extends coverage beyond the premium due date?
Defamation.
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
It remains the same no matter how many children are added to the policy.
Which of the following is true about the premium on the children's rider in a life insurance policy?
increasing term
What type of insurance would be used for a Return of Premium rider?
Nonforfeiture values
Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses?
c) The annuitant receives a fixed amount of return.
All of the following statements about equity index annuities are correct EXCEPT a) The interest rate is tied to an index such as the Standard & Poor's 500. b) They invest on a more aggressive basis aiming for higher returns. c) The annuitant receives a fixed amount of return. d) They have a guaranteed minimum interest rate. Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.
a) An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him.
Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT a) An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him. b) An agent offers the use of his lake house to person as an inducement to buy. c) An agent offers to share his commission with a policyholder. d) An agent offers tickets to a baseball game as an inducement to buy insurance.
b) If the employee enrolls within a certain time period
Under what conditions will proof of insurability NOT be required of an employee wanting to enroll in a group insurance plan? a) If the employee has maintained consistent insurance coverage b) If the employee enrolls within a certain time period c) The employee will never have to provide proof of insurability in order to enroll in a group plan d) If the employee has been approved for other insurance policies in the past
When the application is signed and a check is given to the agent
When is the earliest a policy may go into effect?
reduced paid up
Which nonforfeiture option provides coverage for the longest period of time?
60
A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?
cross-purchase plan
A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a
level term
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
guaranteed insurability
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability option.
Cameron is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he feels he can afford at this time, he wants to be sure that additional coverage will be available in the future. He should include in this policy a
The proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner.
If a life insurer holds the proceeds of any policy it issues, which of the following is true?
a) credit history report
If a life insurer holds the proceeds of any policy it issues, which of the following is true?Applications to an insurer must include all of the following information, EXCEPT a) Credit history report b) Name of the agent c) License identification number of the agent d) Name of the insurer
Return the application to the applicant for a signature.
If an agent fails to obtain an applicant's signature on the application, the agent must
buyers guide
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?When is the earliest a policy may go into effect?
providing a written comparison and summary statement
Which of the following is among the regulations set forth by the Florida Replacement Rule?
term rider
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?
a) Option B
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a) Option B b) Corridor option c) Variable option d) Option A
replacement rule
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
certificate holder
If an employee is accepted into a group insurance plan, which status will the employee have?
Fiduciary responsibility.
The requirement that agents not commingle insurance monies with their own funds is known as
8%
In life policies issued in this state, insurers are permitted to charge interest during the policy grace period for the number of days elapsing before the premium is paid. What is the maximum annual interest rate?
grace period
What required provision protects against unintentional lapse of the policy? The following are legitimate uses of insurance in a business setting EXCEPT
stock
Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?
c) The name of the writing agent.
Under a group plan, Certificates of Insurance must include all of the following EXCEPT a) A description of the insurance protection. b) The name of the insured. c) The name of the writing agent. d) The group policy number.
An agreement between a ceding insurer and assuming insurer
What is reinsurance?
