PA Insurance Exam Practice

Guaranteed insurability rider

Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n

Equity index whole life

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this?

Premium mode is a term used to describe the

Frequency of the premium payments

Increases

How is the cost of a policy affected when a policyowner pays premiums more frequently?

20

How many employees must an employer have for a terminated employee to be eligible for COBRA?

A proprated death benefit based on the amount of insurance the insured premiums would have been if purchased at the correct age

If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies

The insured outlived the beneficiary

If the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if

May never raise premiums

In contrast to a guaranteed renewable policy, a noncancellable policy

Provide evidence of insurability to the insurer

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST

Declarations

In what part of an insurance policy are policy benefits found?

hedge against inflation

Index whole life insurance contains a securities component that acts as a(n

Liquidity

Insurance premium is determined by each of the following factors EXCEPT

What is the purpose for having an accelerated death benefit on a life insurance policy?

It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

The death benefit paid will be what the premium would have purchased at the correct age

James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?

Net death benefit will be reduced if the loan is not paid

Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE

Child Term Rider

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?

10 days

Kathy pays a monthly premium on her health insurance policy. How long is her grace period

Results

Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?

equal the face amount of the policy

Level premium permanent insurance accumulates a reserve that will eventually

An insured was injured as an innocent bystander when someone committed a felony. The insurer is

Liable

In Pennsylvania, completion of continuing education is required upon license renewal for which of the following?

Licensed individuals qualified in major lines of insurance

People and time

Mortality is calculated by using a large risk pool of

Class

Naming a contingent beneficiary as "all surviving children" is described by which term?

Accumulation at interest

Of the following dividend options, which of these is taxable

accumulation of interest

Of the following dividend options, which of these is taxable

Monthly

Over the course of a year, which premium payment mode is most expensive?

Collateral assignment

Ownership of a life insurance policy may be temporarily transferred with a(n)

Common Disaster Clause

Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?

Which type of multiple protection policy pays on the death of the last person?

survivorship life policy

Joint

A life insurance policy written on one contract for two people in which it is payable upon the first death is called

Disability income rider

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?

Guaranteed insurability rider

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n

Lifetime Protection

A limited payment whole life policy provides

Viatical settlement agreement

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

Viatical settlement contract

A policyowner can receive an immediate payment before the insured dies by using a(n)

Irrevocable beneficiary

A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?

Nonforfeiture provision

A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)

A partial surrender

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)

a policy that is paid up after only one payment

A single premium cash value policy can be described as

From Insurer to insurer

A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occur

Completely and permanently disabled

A waiver of premium rider allows an insured to waive premium payments if the insured is

File written proof

After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms

Reduction of premium

All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT

Waiver of premium

All of the following riders can increase the death benefit amount EXCEPT

Extended term

All of these are settlement options for life insurance policies EXCEPT

Disability

All of these are standard exclusions found in a life insurance policy EXCEPT

Rider

An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n)

An internist

An example of a primary care physician would be a(n)

To the children born of my union with Ned Jackson

An example of naming a beneficiary by class would be

Change of occupation provision

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates

Contingency benefits

Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident?

Accumulation of interest option

Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?

Physical therapy

Which of the following is NOT a common exclusion for a medical expense policy?

Must be initiated by the applicant

Which of the following is a requirement for ANY change in an insurance application?

Optional renewability clause

clause that allows an insurer the right to terminate coverage at any anniversary date is called a(n)

universal life

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called

Normally anytime during the policy term

A beneficiary change can occur

No federal income tax is owed on life insurance proceeds

A beneficiary has just received a claim payment for a life insurance policy. Which of the following is TRUE regarding the federal income tax liability owed?

Medical underwriting

A guaranteed issue insurance policy has no

Conditionally renewable

A health insurance policy where the insurer has the right to terminate the policy for reasons other than the insured's health is calle

Life insurance policies will normally pay for losses arising from

Commercial aviation

In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned?

Concurrent Review

Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt

Dies instantly

Non cancelable

Disability Income plans which require that the insurer can NEVER change or alter premium rates are usually considered

Can be converted to permanent coverage without evidence of insurability

Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?

The correct answer is "$0". Benefits that fall under a major medical plan are considered to be a reimbursement for a loss, and is not taxable as income.

Pierre is covered by his employer's group major medical plan. His employer pays for 75% of the premium and he pays for 25%. How much would a $10,000 benefit be taxable as income under this plan?

Spendthrift trust clause

Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause?

A life insurance policyowner does NOT have the right to

Revoke a absolute assignment

4000

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much mayRon increase the face value of the policy

Seeks temporary protection and lower premium

Term insurance is appropriate for someone who

Accident

The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n

Application

The entire contract includes the actual policy and the

Obtaining referrals to specialists from primary care physicians

The gatekeeper's role when used by an HMO is

Decreasing

The least expensive option to pay off a 30-year mortgage balance would be

What happens when an insurance policy is backdated

The policies effective date is earlier then the present

Monthly

The premium payment mode that results in the highest overall cost would be

The free-look provision gives the policyowner

The right to return the policy for a full refund within a specified number of days

1035 exchange

Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called a(n)

The insurer's obligation to pay a death benefit upon an approved death claim

Under a life insurance policy, what does the insuring clause state?

A securities license is required for a life insurance producer to sell

Variable life insurance

coverage is eliminated

What happens to the coverage under a children's term rider when that child reaches a certain specified age

Increases

What happens to the total amount of premium paid for an insurance policy when the payment frequency increases?

Period of time after the premium is due but the policy remains in force

What is an insurance policy's grace period

Pay age-corrected benefits

What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

Estate

What is created after policy proceeds are obtained in a lump sum and then immediately invested?

Entire contract

What is the name of the provision which states that a copy of the application must be attached to the policy when issued

Reduced death benefit prepayment

What is the primary feature of a viatical settlement?

level premiums

When a decreasing term policy is purchased, it contains a decreasing death benefit and

Spendthrift clause

Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary's creditors?

Avocation(Hobbies)

Which of these factors help determine an insured's life insurance premium?

Death benefit

Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?

Cost

Which of these is affected by the frequency of an insurance policy's premium payments?

Bi-weekly

Which of these premium payment frequencies is not typically available to a policyowner?

Individual

Which type of beneficiary should be named if the insured wants to give explicit directions on how the policy proceeds should be paid?

Variable Universal Policy

Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested

Payor benefit

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies

term, whole, and universal life insurance

Whole life policy with premiums paid up after 20 years What types of life insurance are normally used for key employee indemnification

All of these are valid options for an Adjustable Life Policy EXCEP

a nonforfeiture option can be used to increase the death benefit