Practice .15
14. Regarding beneficiaries, which of the following statements is CORRECT?
(b) The policy owner may name anyone as beneficiary.
4. Which of the following is TRUE about endowment policies?
(b) They emphasize savings more than other life policies
17. Which type of contract pays a stated sum, regardless of the actual loss incurred?
(b) Valued contract
3. Which of the following statements concerning binding receipts is FALSE? (a) Coverage is guaranteed, even if the proposed insured is found to be uninsurable, until the insurer formally rejects the application. (b) Like the conditional receipt, a binding receipt typically stipulates a maximum amount that would be payable during the special protection period. (d) Binding receipts are often reserved only for a company's most experienced agents since they can place the company at considerable risk.
(c) Coverage continues until the policy is issued as requested, but in no event for more than 90 days from the date the agreement was signed.
9. Which of the following statements about credit life insurance is INCORRECT? (a) It is life insurance on the life of a debtor (b) The amount of insurance cannot exceed the amount of the debt (d) The insurance commences on the date the debtor becomes obligated to the creditor
(c) Debtors cannot under any circumstances choose their own credit life insurer
5. Regarding variable annuities, which of the following statements is INCORRECT? (a) A variable annuity may be purchased on either a deferred or immediate basis (b) The period of time during which funds accumulate is called the accumulation period (d) During the pay-in period, the investor would be purchasing accumulation units
(c) During the accumulation period the investor would be purchasing annuity units
19. All of the following terms are frequently used to describe insurance companies and their site of incorporation EXCEPT: (a) Alien (b) Foreign (d) Domestic
(c) Home-based
In which of the following situations would the incontestable clause NOT apply? (a) Concealment (b) Fraud (d) Misrepresentation
(c) Impersonation
13. Which of the following is a TRUE statement?
(c) Premiums are based on mortality, interest assumed, and loading for expenses and contingencies.
18. What amount will be paid by the insurance company in the event death of the insured results from suicide during the first year the contract is in force?
(c) Premiums paid to up to date of death
8. A Legal Reserve Life Insurance Company is desirable from a policyholder's viewpoint because
(c) The Legal Reserve is calculated scientifically using proper mortality and interest assumptions to assure the maturity of a policy (issued at any age) in accordance with its terms.
12. Which of the following is TRUE regarding juvenile insurance?
(c) The adult applicant is the owner of the policy until the child comes of age and is able to take over the payments
20. An individual tendency that arises from an attitude or state of mind that causes indifference to loss is a
(c) morale hazard.
11. Which of the following statements pertaining to unethical selling is INCORRECT? (a) An agent tells a prospect that future policy dividends undoubtedly will be as much or more as are being paid currently. He is guilty of misrepresentation. (b) An agent asserts to an applicant that the incontestable clause in a policy simply means that the policy can never be contested. The agent is guilty of misrepresentation. (c) An agent states to a prospect that a competing insurer is charging lower premiums because it is hurting for business. The agent is guilty of defamation.
(d) An agent tells a prospect that policy dividends are not guaranteed. The agent is guilty of misrepresentation.
23. Which of the following would NOT be cause to suspend or revoke an agent's license? (a) Demonstrating incompetence to transact business as an insurance agent (b) Unlawfully rebating or attempting to unlawfully rebate (c) Misrepresenting policy contracts
(d) Converting an insured's term insurance to permanent insurance
25. Social Security benefits are financed by a special tax paid by:
(d) Employees, employers and those who are self-employed.
Regarding Stock and Mutual companies, which of the following is NOT correct? (a) Mutual companies issue participating policies. (b) A mutual company is a corporation owned by its policyowners. (c) A stock company's purpose is to make a profit for its stockholders.
(d) Stock companies pay dividends to policyowners.
21. A Close Corporation with a large number of stockholders establishes a Buy-Sell plan. Which of the following type would be most efficient?
(d) Stock redemption plan
24. John Q Agent persuades a prospect to lapse an existing policy in order to purchase a new policy. Which of the following statements is CORRECT?
(d) The agent is guilty of twisting.
